As the shock of the French nomination of Mr Jean-Claude Trichet to head the European Central Bank (ECB) subsided this week, German officials sought to put a brave face on the latest rift between Bonn and Paris.

Bonn was informed in advance of the announcement and officials insisted that the Chancellor, Dr Helmut Kohl, and the Finance Minister, Mr Theo Waigel, were not surprised by the French move.

Yet Mr Trichet's nomination presents Bonn with a profound dilemma, not least because his reputation as a staunch defender of a strong, stable currency is beyond reproach. Indeed, most German financial experts agree that Mr Trichet is one of the two best possible candidates for the top job at the ECB.

The other one is, of course, Mr Wim Duisenberg, the stern Dutchman who now runs the European Monetary Institute in Frankfurt. Germany has already promised the ECB job to Mr Duisenberg, who is widely regarded as a clone of Bundesbank president Dr Hans Tietmeyer.

Despite his much-trumpeted reputation for personal loyalty, Dr Kohl would not think twice about disappointing his Dutch friend if a better option came along. But the Chancellor fears that giving in to French demands over the ECB could rock confidence in the euro, on the international markets and among the German people.

It now appears likely that both Mr Duisenberg and Mr Trichet will have to step aside, to make way for a compromise candidate.