New E.C.B. Official May Be Open to Bond-Buying

Mr. Coeuré, 42, will take office in January, giving France a representative on the six-member board for the first time since Jean-Claude Trichet retired in October as E.C.B. president.

During testimony before a committee of the European Parliament on Monday, Mr. Coeuré said that it might be necessary for the E.C.B. to step up its purchases of sovereign bonds in order to maintain the bank’s control over interest rates.

That was not a declaration in favor of wholesale bond purchases by the E.C.B., which a large group of economists advocate as the only way to hold down borrowing costs and save the euro. But the statement suggested that Mr. Coeuré may be more flexible on the issue than Jürgen Stark, a German who is leaving the executive board at the end of the year because of his discomfort with E.C.B. bond market intervention.

Jörg Asmussen, a high-ranking official in the Finance Ministry, will replace Mr. Stark and is seen as less of a hard liner. However, Mr. Asmussen is also close to Jens Weidmann, the president of the German Bundesbank who has been an implacable opponent of stepping up E.C.B. bond purchases.

Mr. Weidmann repeated his opposition to more bond buying Wednesday in a speech in Berlin. “One idea should be dispensed with once and for all, namely the idea of using the printing press to create emergency funds,” he said. “That would endanger the most important foundation of a stable currency: the independence of a central bank focused on price stability.”

Mr. Coeuré replaces Lorenzo Bini Smaghi, an Italian who resigned to make way for a French representative. Members of the executive board are supposed to represent the interests of the euro area and not a particular country. But there is an unwritten rule that the largest countries in the euro area should each have a seat on the executive board.

After Mario Draghi took over as president of the E.C.B. at the beginning of November, Italy was seen as over-represented on the board.

Mr. Coeuré, deputy director-general of the French Treasury, belongs to the inner circle of officials who manage the country’s debt and finances and has also been a key figure behind the scenes at meetings of the Group of 20 countries.

Official interest rates and other key policy decisions are set by the E.C.B. governing council, which consists of the executive board plus heads of the central banks of the 17 euro nations. But the members of the executive board play a particularly influential role, managing E.C.B. operations and proposing policy initiatives.

The E.C.B. governing council has not yet decided what portfolios Mr. Coeuré and Mr. Asmussen will assume when they join the executive board. Mr. Stark has been the E.C.B.’s de facto chief economist, a position both Mr. Coeuré and Mr. Asmussen are likely to covet.

The European Parliament approved Mr. Coeuré by a wide margin.

Liz Alderman contributed reporting from Paris

Article source: http://www.nytimes.com/2011/12/15/business/global/new-ecb-official-may-be-open-to-bond-buying.html?partner=rss&emc=rss