Newspaper article International New York Times

Protest over Central Bank Nominee ; French President's Choice for Post Is Too Close to Industry, Economists Say

Newspaper article International New York Times

Protest over Central Bank Nominee ; French President's Choice for Post Is Too Close to Industry, Economists Say

Article excerpt

French legislators were asked to block the appointment of Francois Villeroy de Galhau, a former BNP Paribas executive, over concerns that he was too close to the banking sector.

Nearly 150 leading economists on Tuesday rebuked President Francois Hollande's plan to appoint a former executive of France's largest lender to head the country's central bank by calling on legislators to block the appointment over concerns about potential conflicts of interest.

Mr. Hollande said last week that Francois Villeroy de Galhau, formerly co-chief operating officer at BNP Paribas, would head the Banque de France, succeeding Christian Noyer, who is to step down at the end of October. The choice of Mr. Villeroy de Galhau came as something of a surprise, as Benoit Coeure, a French member of the European Central Bank's Executive Board, had been expected to win the job.

Though the European Central Bank is responsible for monetary policy in the eurozone, the Banque de France has an essential role in helping to execute that policy and in regulating the country's banks. In addition, the heads of the central banks of the eurozone's 19 member states are members of the E.C.B.'s Governing Council, the organization's main policy-making body.

The Elysee Palace did not respond to requests for comment. The Banque de France declined to comment.

Mr. Villeroy de Galhau did not respond to requests for comment. But in a Sept. 8 letter to Mr. Hollande that was obtained by The New York Times, Mr. Villeroy de Galhau noted that he had spent 20 years in public service before joining BNP Paribas, and said he would go beyond the letter of the law to ensure he was on a sound ethical footing.

Mr. Villeroy de Galhau stressed in the letter that he was not due any remuneration from BNP Paribas, and said he would hold no shares in the bank once he had disposed of stock that he could not legally sell until next year. He also played down the prospect that his regulatory mandate would allow for any possible partiality toward his former employer.

He also pledged to recuse himself "from any individual decision involving BNP Paribas or its subsidiaries" for two years.

Choosing a new central bank chief is often a fraught task for a political leader, and there is plenty of precedent for appointing former bankers to the job. For example, Mario Draghi, the European Central Bank president, is a former vice chairman and managing director of Goldman Sachs.

Though Mr. Villeroy de Galhau served for years in French government posts before he joined BNP Paribas in 2003, his selection raised eyebrows among some who thought the revolving door was perhaps swinging a bit too swiftly for comfort: Having left BNP Paribas in May, he would be expected to enforce the eurozone's banking regulations on his former colleagues just months later, they argued. …

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