German Chancellor Angela Merkel and French President Nicolas Sarkozy are backing the candidacy of the head of Switzerland's central bank to lead the Financial Stability Board, a newspaper reported on Sunday.
The FSB, the G20's regulatory task force, is charged with making sure bank regulations are strong enough to prevent another financial crisis.
It has been headed by Mario Draghi, who will take over as European Central Bank president on November 1. Swiss National Bank Chairman Philipp Hildebrand and Bank of Canada Governor Mark Carney are vying for the job.
Heading the FSB would not require the incumbent to give up his central bank governorship. An announcement is expected at the November 3-4 G20 summit.
Citing a source familiar with the election process, the Swiss paper SonntagsZeitung said Merkel favoured Hildebrand and also convinced Sarkozy to back him. In exchange, Switzerland had to support Christine Lagarde to head the International Monetary Fund, the paper said.
President Nicolas Sarkozy's office would not confirm the report.
Hildebrand has been a vocal proponent of tougher bank regulation after the Swiss government had to bail out flagship bank UBS
Hildebrand and Carney are good friends and studied together at Oxford.
The SonntagsZeitung also reported that at a recent FSB meeting in Zurich, the idea of naming one of the two to head the FSB and the other to become his deputy came up.
The Swiss government is quietly backing Hildebrand's candidature for the FSB, though some right-wing politicians oppose it, the paper also said.
Of course the federal council supports SNB Chairman Philipp Hildebrand's candidature for the top job at the FSB, Finance Minister Eveline-Widmer Schlumpf told the SonntagsZeitung.
But the government was doing this via diplomatic channels and not publicly, the paper also quoted her as saying.
Yet a member of the right-wing, EU-sceptic Swiss People's Party (SVP) said he was against having the Swiss central bank headed by a top international regulator.
Conflicts of interests will occur, SVP parliamentarian Christoph Moergeli said, adding that the SNB head should focus on Switzerland's interests and not pursue a parallel agenda.
Hildebrand has come into the crosshairs of the SVP before.
Party mastermind Christoph Blocher has called on Hildebrand to resign after the SNB posted its biggest annual loss ever last year due to currency interventions to weaken the Swiss franc.
(Reporting by Catherine Bosley in Zurich, additional reporting by Emmanuel Jarry in Paris; Editing by Helen Massy-Beresford and Sofina Mirza-Reid)