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Last Updated: Wednesday, 18 June, 2003, 15:00 GMT 16:00 UK
Top Euro banker cleared of scandal cover-up
Jean Claude Trichet
Things are looking up for Mr Trichet
Jean Claude Trichet, the man chosen to lead the European Central Bank (ECB), has been acquitted of helping to falsify accounts at a French bank.

The verdict clears the way for Mr Trichet to take over from the ECB's existing president, Wim Duisenberg, although there is still the possibility of an appeal.

Mr Trichet, 60, was one of nine men on trial for their part in the Credit Lyonnais scandal, which culminated in a 31bn-euro ($33.7bn) bailout by the government.

Mr Trichet is a highly-respected central banker, and few doubt that he is qualified for the job of ECB president which includes setting interest rates for the 12 nation eurozone.

European Union leaders could adopt Mr Trichet as their official candidate at the summit in Greece on Friday, leaving few other procedural obstacles in the way.

France will propose that Mr Trichet becomes head of the ECB "as soon as possible", finance minister Francis Mer said.

"I am happy and that's all I have to say," Mr Trichet said, but declined to comment on his future job.

Reform hopes

Economists and financial observers welcomed the news.

"We can all be relieved....no one ever doubted that he was the most suitable candidate for the job," said Thomas Mayer, chief economist at Deutsche Bank in London.

Born 1942 in Lyons
Graduate in engineering and economics, Institut d'Etudes Politiques, Paris
1971-1978: Held various posts in finance ministry
1978-1981: Held various government advisory posts
1984-1993: Held various posts at the Treasury, rising to become head by 1987
1987: Joined general council of the Banque de France, became deputy governor of the IMF and World Bank
1993: Became governor of the Banque de France
2000: Put under investigation over Credit Lyonnais accounts
2002: Ordered to stand trial
2003: Found not guilty
Some economists are also hoping Mr Trichet may initiate a radical shake-up of some of the Bank's policies.

The French Government have made no secret of their plans for ECB reform, commissioning two in-depth reports into the matter last year.

The ECB - and Mr Duisenberg in particular - has been much criticised for failing to take swift action to boost the eurozone's ailing economy.

The criteria for setting the eurozone's interest rates - currently determined by the need to keep inflation in check rather than stimulate growth - could be changed.

"With Duisenberg gone, we'll hear more talk about growth and less about inflation," said Anais Faraj, an economist at Nomura.

Experts say Mr Trichet is more likely to press ahead with such changes than the conservative Mr Duisenberg, but still question whether a significant shift in monetary policy will occur.

"The ECB is a large and cumbersome body, one individual may not have an immediate impact," Mr Faraj warned.

The case

One of France's biggest banks, Credit Lyonnais, ran into serious trouble following a series of disastrous investments in the late 1980s and early 1990s.

In 1992 and the first half of 1993, the bank's financial situation was so dire that its very solvency was in doubt.

Official accounts signed off by Mr Trichet, who was Treasury Secretary at the time, did not reflect this.

Mr Trichet says he was deceived by Credit Lyonnais, and was never part of a cover-up.

Former Bank of France governor Jacques de Larosiere was also acquitted but former Credit Lyonnais president Jean-Yves Haberer was handed an 18-month suspended jail sentence.

The BBC's Caroline Wyatt
"Mr Trichet can now take over at European Central Bank as planned"

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06 Jan 03  |  Business

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