CURRENCY markets drove the French franc sharply lower yesterday on speculation that a government move to prosecute former bosses of state owned bank Credit Lyonnais might tar the Bank of France governor, Mr Jean Claude Trichet.

The Finance Minister, Mr Jean Arthuis, said on Thursday he was seeking the prosecution of former bosses at Credit Lyonnais on the basis of fresh information on losses which drove the state owned bank 10 the brink of bankruptcy.

As director of the treasury when the bank made some of the largest losses in French corporate history, Mr Trichet was in charge of supervising state owned banks. He was the first to alert the government to the problems, calling for an investigation in a letter in October 1991.

Nevertheless, French newspapers saw the prosecution call partly as an attempt by President Jacques Chirac to destabilise or humble Trichet. Conservative go supporters are anxious to a stagnant economy in time 1998 parliamentary elections.