Thursday, September 6, 2012
Will Mario Draghi’s plan be enough?
September 6, 2012
If Jean-Claude Trichet had ever declared that the European Central Bank (ECB) was willing to provide a "fully effective backstop" against the break-up of the euro, it's quite possible that the crisis in the eurozone would be over by now.
Of course countries like Spain would still be having a tough time, but we might well not be talking about them as much - and we might not be paying so much attention to ECB press conferences.
Needless to say, Mario Draghi's predecessor at the top of the ECB never said anything nearly as supportive. And the bond purchases he reluctantly sanctioned in 2010 and 2011 were a lot more half-hearted than the programme of "outright monetary transactions" described, at some length, by Mr Draghi, today.
Is talk of an ECB "backstop" enough to resolve the crisis in the autumn of 2012, under President Draghi? Initially, some in the financial markets seemed to have their doubts. The immediate reaction to Mr Draghi was that people sold euros, and the value of the currency fell. But stock markets have leaped since the end of the press conference, suggesting that - for once -the ECB has not disappointed.