European Parliament backs Draghi as ECB chief

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European Parliament backs Draghi as ECB chief

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The European Parliament has endorsed Italy’s Mario Draghi to be the next head of the European Central Bank.

That came ahead of formal backing for the appointment from European Union leaders

There is however still an impasse between Italy and France over the fact that the ECB’s executive board would have two Italian members.

France believes it should have one position to replace outgoing ECB president Jean Claude Trichet.

At issue is the fate of Italian Lorenzo Bini Smaghi, who is on the six-member executive board that sets interest rates, along with the 17 other euro zone central bank governors. His eight-year term at the ECB does not end until May 2013.

The French government has suggested Bini Smaghi could move to replace Draghi as head of the Italian central bank.

In April, Italian Prime Minister Silvio Berlusconi promised French President Nicolas Sarkozy that Italy would yield Bini Smaghi’s place on the ECB board to a French candidate, in return for France’s backing of Italy’s Mario Draghi for president.

However, Berlusconi had failed to talk to Bini Smaghi about that.

Bini Smaghi has refused to quit, leaving Berlusconi with egg on his face and delivering a rebuff for France.