As Mario Draghi marked his first year in the job as president of the European Central Bank, the eurozone economy remained troubled and the feeling was that it is too early to say how successful his tenure has been.
Draghi has certain been controversial. In July he made a bold pledge: “The ECB is ready to do whatever it takes to preserve the euro, (long pause) and believe me, it will be enough.
He followed that with the long term refinancing operation – one trillion euros in low-interest three-year loans to eurozone banks.
Initial financial market enthusiasm waned, however, as it became clear the banks were not using that cash to stimulate the economy.
Draghi has also reduced the benchmark interest rate – three times – to a record low of 0.75 percent, in contrast to his predecessor Jean-Claude Trichet, who put them up in the last months of his term. Economists expect another rate cut within months.
A planned bond-buying programme was Draghi’s next announcement, but with strict conditions; it was successful in lowering the borrowing costs of weaker eurozone countries, buying time for structural reforms by their governments.
The ECB has also gained more power to oversee the banks that got us into this mess. Draghi recently admitted that reforms to the way EU banks are supervised probably will not be implemented for another “year or so”. But he said the certainty from having a regulatory framework in place is more important than the timing.