Bank of Italy governor Mario Draghi is in pole position to replace Jean-Claude Trichet as president of the European Central Bank. But Germany, which was widely expected to provide the next ECB head, remains ambiguous on Draghi's chances.

Mario Draghi (INSM)

By Gianluca Paolucci

Bank of Italy Governor Mario Draghi would be a "first-rate candidate" for the presidency of the European Central Bank (ECB), according to Werner Hoyer, German Minister of State at the Foreign Office, who oversees European affairs. He underlines, however, that "the German government does not have a position" on who should take over from outgoing ECB head Jean-Claude Trichet.

Like many members of the Free Democratic Party (Fdp), the liberal party to which he belongs, Hoyer also liked the idea of "Axel Weber president of the German Central Bank for his vision of monetary policy based on stability." Unfortunately, Hoyer notes, "Weber is no longer a candidate."

Draghi's nationality is not an issue, insists Hoyer. The governor of Bank of Italy is "one of the first-rate candidates," partly because he too has "a vision of monetary policy based on stability," as well as "impeccable" credentials. According to other German government sources, a lot will depend on how the Italian government seeks to support Draghi in the contest for the top seat at the ECB Eurotower headquarters.

One certainty is that as the deadline for a decision draws closer, there are no other candidates in view with the Italian's prestigious profile. That reputation was built in part on the work he did internationally as the chairman of the Financial Stability Board during the most difficult periods of the global financial crisis, which also won him the recognition of the German government.

Many of German Chancellor Angela Merkel's economic advisors, who have had dealings with Draghi at G20 meetings, sing the banker's praises. Still, German Finance Minister Wolfgang Schäuble's public declarations on Draghi's candidacy seemed platitudinous more than anything.

Time is on Draghi's side. Trichet's term expires on October 31, but a decision on his successor needs to be taken a lot sooner. Less than a month ago, a few weeks after Weber's "withdrawal", Schäuble said that Germany might put forward someone else as its national candidate. But none of the names suggested, ranging from Jurgen Stark, member of the executive board of the European Central Bank, to Klaus Regling, chief of the European Financial Stability Facility, appear to have garnered support amongst the various parties in Merkel's coalition.

At this point, the German decision now rests in the hands of Merkel, who recently clashed with the Italian government over its proposal to introduce shared euro bonds to restore confidence in the euro. Thus when asked about Draghi's chances of becoming the next president of the ECB, Hoyer ends the conversation by saying with a smile: "Go ask Tremonti", referring to Italian Minister of Economy and Finance Giulio Tremonti.