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UPDATE 1-Luxembourg warns on new ECB chief delay -paper

Published 02/15/2011, 04:41 AM
Updated 02/15/2011, 04:44 AM
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* Italy's Draghi seen as impressive, intelligent -paper

* Frieden says has to evaluate other names as well -paper

* German daily says France would support German candidate

(Adds no comment on Luxembourg's Mersch, German newspaper)

MILAN, Feb 15 (Reuters) - A successor to Jean-Claude Trichet as head of the European Central Bank (ECB) needs to be decided on quickly to avoid instability, Luxembourg Finance Minister Luc Frieden said in newspaper comments on Tuesday.

He told Italy's La Stampa daily that Bundesbank President Axel Weber had been a good candidate to be ECB president before he dropped out last week. Bank of Italy Governor Mario Draghi was impressive and intelligent, he said in an interview.

"There is a need to decide as soon as possible. Trichet leaves in October. A delay risks generating instability," Frieden said.

Draghi's time with U.S. investment bank Goldman Sachs Group Inc is not a problem and having worked in the private sector can be a big advantage, he said.

Draghi has a chance of becoming ECB president if he is a candidate, Frieden said.

"I have known Draghi for some time. I have always found him impressive and intelligent ... Don't ask me, however, now, if I will vote for him. First I have to evaluate the other names as well," he said.

European Union leaders are expected to select a new ECB president around the middle of the year. Draghi is among front-runners for the job. [ID:nLDE7181F1]

In the interview, Frieden made no comments on Luxembourg's central bank governor Yves Mersch and whether his government would propose him for the ECB. Mersch has been speculated about as one of the candidates to take over from Trichet.

In the newspaper interview, Frieden also said that work on new euro zone fiscal governance rules was going too slowly. Once there is political consensus the details can be completed by experts in two or three days, he said.

Meanwhile, a German newspaper reported on Tuesday that France would support the selection of a German candidate to succeed Trichet.

"A German at the head of the ECB would send a strong signal to financial markets that the Bundesbank's rescue efforts for the euro would be brought along," business daily Handelsblatt quoted an unnamed person familiar with the situation as saying.

France would continue to follow this line of thinking, the person told the paper, and did not support a candidate for the job from a small EU country or Italy, it added.

Paris feels Draghi's time spent working at Goldman Sachs is politically detrimental, the paper reported. (Reporting by Nigel Tutt and Brian Rohan; Editing by Tomasz Janowski and Catherine Evans)

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