The decision of the French court to acquit Mr Jean-Claude Trichet of the charges made in connection with the Crédit Lyonnais banking scandal is good news. It is good news for a man who is highly respected and who deserves this respect.
It is also good news for the European Central Bank (ECB), which has been handicapped by the uncertainty surrounding the succession of its president, Mr Wim Duisenberg. Now that this seems to have been cleared - barring an appeal by French prosecutors - it is appropriate to ask what difference Mr Trichet would make at the helm of the ECB.
The cynical answer is: very little. The ECB is not the US Federal Reserve, where the chairman is clearly in charge. The institutional structure of the euro-zone system of central banks is very different. The national central bank governors exercise considerable influence over euro-zone economic decision-making and will continue to curtail the power of the ECB president.
Also, it is the chief economist of the ECB's governing council who prepares its meetings and formulates the policy options to be discussed.
In such an environment, the new president will have limited freedom to impose his views.
For the cynics, the difference between Mr Trichet and Mr Duisenberg will amount to very little.
Yet strong individuals can sometimes make a difference. There can be little doubt that Mr Trichet will be a more forceful leader than Mr Duisenberg - which, according to some, will not be difficult.
He is likely to want to be more involved in the preparation of the governing council meetings and the formulation of policy options. A power struggle with the chief economist is, therefore, a strong possibility.
All this should lead to some changes. There are two areas where these are most likely.
First, communication will probably improve. Mr Trichet's smoother style will be a factor. More importantly, Mr Duisenberg has all too often appeared not to be in charge, giving the impression that others have made the decisions. This has made it difficult for him to communicate effectively. A more forceful personality such as Mr Trichet will want to at least give the impression of being in charge, which will ease communication with the public.
Of course, one should not expect too much. Mr Trichet will be no Alan Greenspan. It will remain inherently more difficult for the ECB president to be seen as the forceful central banker.
The second area where change is to be expected is monetary policy strategy. Under Mr Duisenberg, the ECB's strategy has deviated, and continues to deviate, from best-practice central banking. It has failed to clearly define what its objectives are and how it wants to achieve them. Best-practice central banking includes defining a symmetrical inflation target, with some leeway each side of the target.
The start of the new presidency is an opportunity to define a strategy that comes closer to best practice and that will create less confusion. Besides, not much change is required; there is no need for a revolution and the markets will welcome such a development. It is likely that Mr Trichet will make his move quickly.
Will this change in strategy also include raising the inflation target to 2.5 or 3 per cent? Many economists would welcome such an increase, especially as some euro-zone countries have structurally higher rates of inflation and are, therefore, pushing other members dangerously close to the zero inflation limit, creating a deflationary bias in those countries. In addition, as the critics have argued, the maintenance of a target that says inflation should not exceed 2 per cent has led the ECB to react too slowly to growing recessionary pressures.
It is not clear if Mr Trichet will want to change this part of the ECB's strategy. After all, he made his reputation forcing the rate of inflation in France down to the German level amid howls of protest from French politicians, economists and intellectuals.
He stood firm and earned a reputation as a hard-nosed inflation fighter - quite a feat in France.
I expect that Mr Trichet will want to preserve his hard-fought reputation. But I may be wrong. Sometimes the quality of great leaders is to do the unexpected.
Paul de Grauwe is professor of economics at the University of Leuven
