Bank of France chief Jean-Claude Trichet on Friday overcame one of the last hurdles to becoming president of the European Central Bank when a prosecutor said he should not go to trial over the Credit Lyonnais bank scandal.
French state prosecutor Jean-Pierre Dintilhac recommended that Trichet should not stand trial, a decision regarded as a major breakthrough for Trichet's prospects of taking over next year as ECB president.
Dintilhac's advice needs to be endorsed by the magistrate heading an inquiry into the scandal before years of agony can end, leaving Trichet free of legal tangles to succeed ECB chief Wim Duisenberg of the Netherlands.
There was no immediate comment from ECB headquarters in Frankfurt, nor from Trichet, who officials said was abroad.
Trichet, 59, has long been "heir apparent" to Duisenberg, who has said he will quit on his 68th birthday on July 9, 2003.
The threat of trial in connection with the Lyonnais scandal had clouded Trichet's hope of becoming the world's most powerful central banker after US Federal Reserve boss Alan Greenspan.
"This is good news for the ECB and good news for the euro," Tim Stewart, chief currency trading strategist at Morgan Stanley investment bank in New York, said. "It's unlikely to have an effect on the day... but it is positive."
Trichet was placed under official investigation in mid-2000 as part of a vast judicial probe into the near-demise of Credit Lyonnais and allegations of a cover-up of huge losses 10 years ago while he was director of France's treasury.
Credit Lyonnais was owned by the government at the time, and the job of treasury director included keeping tabs on the finances of French state-owned groups.
The final decision on whether to hold a trial lies in the hands of investigating magistrate Philippe Courroye, but legal experts said there is rarely a conflict between the stand taken by public prosecutors and investigating magistrates.
Trichet has refused to comment since he announced in 2002 that he was the subject of an inquiry, although he said at the time he believed he had done all he could to make sure things were put right at Credit Lyonnais.
Dintilhac said in a statement several others should be tried, including former Lyonnais boss Jean-Yves Haberer and another senior executive at the time, Francois Gille. He advised likewise for a former Bank of France boss, Jacques de Larosiere.
Along with Trichet, the recommendation said there should be no trial for an ex-Treasury official who is now chief financial officer of technology giant Alcatel, Jean-Pascal Beaufret, plus several others.
European capitals, whose only say over the ECB is the naming of top officials, recently agreed to replace the only Frenchman on the ECB's executive board, Christian Noyer, with Greece's Lucas Papademos. Friday was Noyer's last day at the ECB.
Showing how sensitive such postings are, even the Greek's appointment sparked a brief diplomatic tussle when Belgium fought to get a rival Belgian candidate on board instead.
Several European capitals have reiterated in recent months that the top job should go to a French citizen in line with a deal struck in 1998 when Duisenberg was appointed as the first head of the new ECB against France's wishes.