Trichet ordered to appear at trial in new year

The French trial for misleading accounting at the Crédit Lyonnais Bank, at which Central Bank governor Mr Jean-Claude Trichet has been ordered to appear, has been scheduled for January 2003 in Paris.

The trial, which is expected to run from January 6th to February 12th, could allow Mr Trichet time to clear his name before taking over as president of the European Central Bank (ECB).

The current ECB president, Mr Wim Duisenberg, is due to step down in July 2003 and Mr Trichet has been tipped as a likely successor.

Mr Trichet was placed under investigation in April 2000 on suspicion of "spreading false information on the market, and presenting and publishing inexact accounts" in the rescue of the Crédit Lyonnais bank.

The charges date to 1992 when Mr Trichet was treasury director at the French finance ministry. He was suspected of having too readily accepted financial information that tended to minimise the deepening problems at Crédit Lyonnais.

Meanwhile, ECB council member Mr Ernst Welteke said yesterday that the bank would not be influenced in its interest rate decisions by political calls for an interest rate cut. "We will do what we think is right," he said yesterday while attending a banking conference.

"The ECB of course does not allow itself to be influenced and it is the same when a policy step is the right one," he continued.

Mr Welteke said the ECB had to be mindful that markets did not have the impression it could be influenced.

He said that money supply growth during a period of low interest rates and turbulence on the financial markets had to be evaluated differently than in an opposite situation.

According to data issued yesterday, the money supply M3 measure showed that growth climbed to 7.4 per cent in September from 7.0 per cent in August. M3 is a key pillar of the ECB's monetary strategy as the bank is convinced that, under normal circumstances, fast-growing money stock can spell inflation trouble ahead.

However, the ECB has also made clear that the weak economy made it unlikely that fast M3 growth, inflated by investors fleeing tumbling stock markets and moving into assets captured by the M3 aggregate, would translate into a rise in consumer prices.