A long-running dispute over the presidency of the European Central Bank (ECB) may be resolved by an agreement to split the first term between the two front runners for the job, according to a report in the German business daily Handelsblatt yesterday.

The deal would give the post to the former Dutch central banker, Mr Wim Duisenberg, for the first four years and to Mr Jean-Claude Trichet, governer of the Bank of France, for the following four years.

The report cites German government sources but officials in Bonn were refusing to comment yesterday. An informed source told The Irish Times that Bonn would be pleased with the arrangement, but insisted that it represented nothing more than a deal between France and the Netherlands.

Bonn insists that the job should go to a representative of one of the smaller EU states, to counteract the impression that France and Germany are carving up European Monetary Union between them.

Mr Duisenberg (63) is currently president of the European Monetary Institute, the forerunner of the ECB. He is a tough central banker in the tradition of the German Bundesbank and Bonn sees him as the best guarantor of a strong euro. But Mr Trichet (55) also enjoys a reputation for stability and, as the architect of the "franc fort" policy, he is no stranger to controversy or unpopularity.

Germany would welcome the deal, but other European Union member states may feel unhappy about such an important post being filled by means of a backstairs deal and new candidates could emerge in the coming weeks.