April 27, 2018 / 7:05 AM / a year ago

UPDATE 2-Rehn proposed as Bank of Finland chief and ECB council member

(Adds comments from supervisory council, analyst)

By Jussi Rosendahl

HELSINKI, April 27 (Reuters) - The European Union’s former top economic official Olli Rehn has been proposed by a Finnish parliamentary council to become the next governor of the Bank of Finland from July.

Rehn beat ECB supervisory board member Pentti Hakkarainen in the race for the top job thanks to his overall view of economic and monetary policy and experience in international policymaking, said Matti Vanhanen, the chairman of the council of lawmakers that conducted the selection process.

His appointment for the seven-year term is expected to be made by the president next month.

Rehn, currently the bank’s deputy governor, was widely considered to be the favourite for the job that also includes membership of the European Central Bank’s rate-setting governing council.

Rehn, 56, spent a decade at the European Commission, and during the euro zone debt crisis was economic and monetary affairs commissioner.

“It was a difficult choice (between Rehn and Hakkarainen), but eventually an unanimous one,” Vanhanen told Reuters.

“Working as the EU’s economy commissioner, who also participated in the ECB meetings at the time when crisis mechanisms were created under extreme pressure, that has given him an exceptional experience.”

As the commissioner, Rehn became known for advocating strict fiscal discipline and structural reforms for troubled European states.

Rehn later had a short stint as Finland’s economy minister, helping the centre-right government to clinch a historic labour reform deal with the country’s powerful trade unions.

Vanhanen denied that party politics had anything to do with the choice, pointing out that opposition parties were also represented in the council. Rehn belongs to Prime Minister Juha Sipila’s Centre Party.

Nine other people, all of them men, applied for the governor post. Rehn has declined to comment before final appointment.

Rehn will succeed Erkki Liikanen, 67, who will complete his second and final seven-year term in July. Major policy changes are not expected.

Analysts said Finland was seen as a moderately hawkish euro member that largely backed ECB President Mario Draghi, while the central bank’s analysis was well regarded at the ECB.

“Rehn is not filling any small shoes here, Liikanen has made an impact at the ECB,” said economist Pasi Kuoppamaki from Danske Bank.

Liikanen has been speculated upon as a possible compromise candidate from a northern country to succeed Draghi in 2019. (Reporting by Jussi Rosendahl; Editing by Christian Schmollinger and Alison Williams)

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