Ex-EU economic chief Rehn switches from government to monetary policy

October 14, 2016 8:50 AM EDT

Olli Rehn is pictured at the start of his European Parliament election campaign in Helsinki April 11, 2014. REUTERS/Mikko Stig/Lehtikuva

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By Jussi Rosendahl

HELSINKI (Reuters) - Olli Rehn, the former top economic official of the European Union, has been appointed to the board of the Bank of Finland, which means he must resign as Finland's Minister of Economic Affairs.

The Finnish central bank's parliamentary supervisory council said on Friday it had chosen Rehn and Marja Nykanen for five-year terms on the bank's three-member board, starting in February.

Rehn stepped down in 2014 after a decade at the European Commission and became Minister of Economic Affairs last year. His departure from the government at the end of this year poses a challenge for the three-party coalition government, which was close to collapse last year after six months in power..

"I would have been motivated to continue, but I wanted to move to the field which I feel is my strength and a target of passion," Rehn told reporters.

Seen as a consensus builder, 54-year-old Rehn helped the government to clinch a labor reform deal with the country's powerful trade unions in June.

The government, facing a stagnant economy, is cutting spending and pushing for more reforms to lift employment and rein in public debt. But the ruling parties have varying views on new austerity measures and cuts in unemployment benefits.

For Rehn, joining the board is widely considered a stepping stone to the post of central bank governor, which would also make him a member of the rate-setting Governing Council of the European Central Bank. The current governor, Erkki Liikanen, is due to step down in 2018.

Asked whether he was interested in the top post, Rehn said: "I will fully focus on this job, there's no use of going ahead of matters."

On the board, Rehn and Nykanen replace Pentti Hakkarainen and Seppo Honkapohja, who will step down next year. Liikanen is the third board member.

(Editing by Terje Solsvik, Larry King)

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