What is the legacy of Draghi's zero-interest policy?
After eight years in office Mario Draghi stepped down as ECB president on Thursday. His successor is Christine Lagarde. Draghi's presidency was defined by the zero-interest policy which aimed to stabilise the euro and boost economic growth. Commentators take different views of how successful this policy was.
A creative defender of the euro
Draghi's main achievement was rescuing the European currency, Kauppalehti summarises:
“Draghi extended the limits of the mandate during his eight-year term in office. He will be remembered as an unyielding defender of the euro. His legendary words 'whatever it takes' during the 2012 euro crisis have gone down in history. ... Draghi was praised for using the Central Bank's instruments creatively. ... It can be said that he was successful in saving the euro. His intransigence and the fact that Greece was prevented from sliding out of the Eurozone have created confidence in the single currency. But despite all his achievements he did not achieve the goal of raising inflation, despite pumping more money into the market than ever before.”
Unable to fulfil the key mandate
El Economista takes stock of Draghi's term in office:
“Many economists praise his role in saving Greece. He has made the euro more competitive and allowed the creation of new jobs. ... But as far as the ECB's most important mandate is concerned - to raise the inflation rate to just under two percent - he never managed this once during his eight-year term. ... In addition he is leaving behind an executive board that is more divided than ever. More than a third of the members (including France) are worried about the consequences of the stimulus policy adopted in September. They have spoken out against its implementation. Lagarde must now overcome the division and bring the Eurozone back to normality.”
National interests have poisoned the ECB board
What a difficult legacy Draghi has left, NRC Handelsblad remarks:
“Draghi took advantage of the fact that all Eurozone countries, from Malta to Germany, effectively have equal say. During the very controversial meeting in September, he was able to sideline the countries that together represent the majority of the population of the Eurozone countries, their economic power and the euro capital deposited with the ECB. ... Under his leadership not only the policies of the ECB but also the bank itself became more political. Because he failed to create a broad basis for his policies, Draghi allowed the poison of national interests to drip into its executive board. His successor has a lot of repairing to do.”
Zero-interest opponents remain in the minority
The zero-interest policy championed by Draghi will remain unchanged under his successor, the Wiener Zeitung complains:
“Together with a group of colleagues from other euro states, Deutsche Bundesbank President Jens Weidmann is calling urgently for change. Robert Holzmann, Governor of Austria's Nationalbank, is likewise demanding a return to the policy of stabilisation. And they have very good arguments to back their calls: the fact that the zero-interest policy continues to strip savers of assets, the inadmissible financing above all of states on the southern periphery, and the abrogation of free-trade mechanisms as a whole. Unfortunately, it's hardly realistic to believe the stability faction rebels will prevail. Because in purely in numerical terms they're (still?) in the minority in the relevant ECB committees.”