FRANKFURT: European Central Bank (ECB) chief Mario Draghi famously vowed in 2012 to “do whatever it takes” to save the euro.
As the single currency area hurtles towards a possible “Grexit” three years later, the 67-year-old central banker is seeing that pledge put to the test.
With the debt-battered Greek economy essentially cut off from normal financing, the breakdown of talks between Athens and its creditors last weekend has placed Draghi—who insists the ECB is not a political institution—in the front line of efforts to avert disaster.
If Greece crashes out of the euro, it will take the eurozone and Europe as a whole into uncharted waters, a place Draghi only recently said he had absolutely no ambition to explore.
But with growing resistance on the ECB’s decision-making council to a continuation of the provision of emergency liquidity to Greece’s stricken banks, the scenario of greater turmoil is looking increasingly likely.
The Greek crisis is just one in a long list of battles Draghi has had to fight since taking the helm as the “guardian of the euro.
Always immaculately dressed—loyal to the same tailor for years—he has aged visibly since becoming ECB president in November 2011, his face increasingly drawn and his hair greying.
He had barely taken the reins from his predecessor Jean-Claude Trichet when Draghi—known even then as “Super Mario”—embarked on a long series of “unconventional” policy measures to try and extinguish different crises raging across the single currency area.
But it was at an investment conference in London in July 2012 when soaring borrowing costs in individual member countries threatened to tear the single currency apart that Draghi uttered the words: “The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”
That historic pledge—credited with bringing the euro back from the brink—encapsulates Draghi’s skill in picking the right word at the right moment and his courage, a characteristic he said was instilled in him by his father who died when Draghi was just 15 years old.
In an interview, Draghi said his father had taught him “the importance of following your convictions with consistent action and with courage if need be. If you have lost courage . . . you have lost everything.”
Born in Rome on September 3, 1947, Draghi, who is married and has two children, graduated in economics from the University of Rome and won his doctorate at the prestigious Massachusetts Institute of Technology (MIT).
A lecturer at a number of Italian universities, he represented Italy at the World Bank between 1984 and 1990, before being appointed director general of the Italian treasury in 1991.
He remained in that position for 10 years under nine different governments. He was also the mastermind behind a number of privatizations between 1996 and 2001.
In 2002, he joined the board of US bank Goldman Sachs, a position which still earns him criticism even today as the bank was accused of fiddling Greece’s accounts. Draghi has insisted that he acted “with integrity.”
Limits of ECB’s mandate
Draghi insists that the ECB’s overriding mandate is to keep a lid on inflation, that the central bank should not always be forced to take on the role of firefighter in crises, and that it is up to politicians to tackle the root causes of the eurozone’s woes.
He insists that the ECB is not a political, but a “rules-based” institution, but he has never hesitated to step up to the limits of the bank’s mandate.
Indeed, his critics accuse him of overstepping that line, particularly in different asset purchase programs.
His detractors argue they are tantamount to printing money to pay off governments’ debts, which is expressly forbidden in the ECB’s statutes.
In Germany, in particular, groups of euroskeptics have taken the ECB to court over some of its policy measures, so far to no avail.
His diplomatic skill has, most recently, enabled the ECB to overcome resistance to a massive 1.1-trillion-euro ($1.2-trillion) bond purchase program to ward off a dangerous downward spiral of deflation in the euro area.