European Union leaders Friday endorsed Italy's Mario Draghi as the new head of the European Central Bank, according to dpa. "The European Council has just agreed on the appointment of Mario Draghi as new president of the European Central Bank," EU President Herman Van Rompuy wrote on the micro-blogging website Twitter. The Italian central banker is to take over from France's Jean-Claude Trichet and start his eight-year mandate on November 1. France had threatened to block the decision because Draghi's appointment would have left the country with no representative in the ECB's six-member executive board, while Italy would hold two. The second Italian, Lorenzo Bini Smaghi - whose term ends in 2013 - was refusing to resign on the grounds that the ECB's independence would be threatened if he were to bow to political pressures. Diplomats said he relented on Friday. Amid concern that any hesitation on Draghi would further spook markets already on high alert over the Greek debt crisis, Bini Smaghi offered to leave his post by the end of the year, EU sources in Brussels said. French newspaper Le Monde wrote on its website that Bini Smaghi made his offer to leave in a telephone call to EU President Herman Van Rompuy and French President Nicolas Sarkozy. Van Rompuy also held talks with Italian Prime Minister Silvio Berlusconi at the summit, another diplomat said. ING Bank economist Carsten Brzeski described the pressure from Paris to reshape the executive board as "unprecedented and uncalled for." However, Brzeski did not see the move to edge Bini Smaghi out as compromising the ECB's fiercely guarded independence. The appointment of 63-year-old Draghi as ECB president is part of a series of changes in leadership at the Frankfurt-based bank. They include a new member on the executive board, which runs the ECB's day-to-day affairs to replace Bini Smaghi. In addition, the bank's 23-member governing council, which includes the national central bank chiefs of the 17-member eurozone, has two new members. The Dutch government is expected to announce shortly the replacement for Nout Wellink, who is due step down this month as head of the nation's central bank. Germany's Jens Weidmann has just taken up his seat on the governing council after his appointment to head up Germany's influential Bundesbank. As Italy's central banker, Draghi is already a member of the governing council, which also sets interest rates for the currency bloc. Draghi's appointment has been welcomed by financial analysts, who see him as a good communicator. They also think his move to the ECB's top job is unlikely to result in any dramatic change in the institution, which is now in its 12th year. The key question for markets now will be the timing of any possible future rate hikes, analysts say. Many economists expect the ECB will follow up its April rate rise with further increases in borrowing costs over the coming months. But the appointment of the new ECB chief raises the question of whether Trichet will want to mark his departure from the bank in October with a rate hike or whether Draghi would want to launch his presidency by increasing the cost of money, analysts say. Draghi faced no competition in his bid to succeed Trichet at the helm of the ECB. He had already won the backing of the European Parliament and the ECB board. The Italian government is now under pressure to find a job for Bini Smaghi. One high-profile option is to replace Draghi at the Bank of Italy, although Italian Finance Minister Giulio Tremonti is backing another candidate for the post.
