Euro zone bailout fund gets new head from Luxembourg

Luxembourg's then Finance Minister Pierre Gramegna attends the Informal Meeting of Ministers for Economics and Financial Affairs in Berlin, Germany, September 11, 2020. REUTERS/Hannibal Hanschke/Pool/File Photo

BERLIN/BRUSSELS, Nov 25 (Reuters) - Luxembourg's former finance minister Pierre Gramegna will take over the euro zone's bailout fund, the European Stability Mechanism (ESM), from December, succeeding Germany's Klaus Regling who retired last month.

"The ESM Board of Governors just appointed Pierre Gramegna by broad consensus to become the new ESM Managing Director as of 1 December," the chairman of euro zone finance ministers Paschal Donohoe said in a Tweet.

The ESM was created in 2012, during the euro zone's sovereign debt crisis, to lend to euro zone governments cut off from markets. It has a 500 billion euro ($520 billion) war chest and can also lend to recapitalise banks and provide precautionary credit.

Gramegna was the only candidate in the latest round of choosing Regling's successor after several earlier attempts did not bring the required majority support for any of the three candidates at the time, including Gramegna.

Italy and France, who earlier either opposed or did not support the Luxembourger, had changed their views, a senior euro zone official said.

Germany has supported Gramegna from the start, convinced he would be a strong signal to capital markets because of his reputation of being prudent with financial policy.

($1 = 0.9616 euros)

Reporting by Christian Kraemer and Jan Strupczewski; Editing by David Holmes, Kirsten Donovan

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