Mr Trichet is a central banking star

The decision came shortly after the ECB announced it had left eurozone interest rates on hold at 2%. Both moves had been widely expected.

The choice of Mr Trichet, made as far back as 1998, has been highly controversial owing to his three years of involvement in a high-profile corruption case in France.

Mr Trichet was cleared of any wrongdoing in June, and was subsequently endorsed by a string of eurozone governments.

Ups and downs

The ECB's decision endorses his nomination earlier this year by European Union finance ministers.

ECB watchers say Mr Trichet will want to deliver an interest rate cut when he takes over from Wim Duisenberg in November.

This made a cut now, so soon after a half-point reduction in June, highly unlikely.

In addition, there have been a number of more positive signals from eurozone economies, especially Germany, whose lengthy slump may be starting to ease.

The ECB's main interest rate is now extremely low, and many felt it would be rash to make further cuts in a somewhat ambiguous economic situation.

Close call

The ECB governing council said it "had no objections to the proposed candidate, Jean-Claude Trichet, who is a person of recognised standing and professional experience in monetary or banking matters".

After EU governments announced their backing, Mr Trichet was almost certain to be approved by the ECB board.

His appointment has to be formally approved by the European Parliament, with hearings due in September, although most observers see this is a formality.

Mr Trichet has been Mr Duisenberg's heir since the job was created, as part of a Franco-German deal to share power, and might have taken over earlier had he not become embroiled in an investigation of France's Credit Lyonnais.

Now governor of the Bank of France, Mr Trichet was accused of having turned a blind eye to financial mismanagement at the bank, while he was an official in the French Treasury.

Had Mr Trichet not been cleared, the ECB's carefully planned succession would have been thrown into disarray, undermining investors' already fragile confidence in the institution.