Mario Draghi takes centre stage at ECB

Bank of Italy Governor Mario Draghi dodged last-minute French objections to secure the European Central Bank (ECB) presidency in a dispute that threatened to overshadow efforts to prevent a Greek default.

Draghi’s appointment today at the end of a two-day EU summit followed a pledge by euro leaders yesterday to do whatever it takes to support Greece as long as Greek Prime Minister George Papandreou pushes through a package of deficit cuts.

National rivalries flared as French President Nicolas Sarkozy held up the confirmation of Draghi, 63, until another Italian on the ECB board, Lorenzo Bini Smaghi, offered to quit to make way for a Frenchman. Leaders rejected questions that they were interfering with the rate setter’s autonomy.

“The ECB’s independence — of course it’s assured,” German Chancellor Angela Merkel told reporters after the Brussels summit.

The personality conflicts added to tensions between political leaders and the nominally independent ECB, which has prodded euro governments to do more on Greece and tighten the deficit rules that failed to prevent the crisis.

He certainly has impeccable credentials. A graduate of the University of Rome, he holds a PhD in economics from the Massachusetts Institute of Technology and served as professor of economics at the University of Florence between 1981 to 1991.

But Mr Draghi is no dry academic. He went on to become managing director and vice-chairman of Goldman Sachs International, giving him a vital insight into how financial markets work in practice.

He has also worked as an executive director of the World Bank, director general of the Italian Treasury and, perhaps most importantly in the eyes of investors, head of the Financial Stability Board.

Finally, he was appointed governor of the Bank of Italy in December 2005, since when he has gained plaudits for his role in the Italian economy's relatively strong performance in recent years.