By Alessandra Galloni, Brian Blackstone and Jon Hilsenrath
German Chancellor Angela Merkel backed Mario Draghi for the presidency of the European Central Bank, removing the last obstacle to the director Italian central bank is in front of one of the most important institutions of the continent.
Although the 17 countries sharing the euro have until the end of the month to make the designation, and other countries can present their own candidates, economics professor, former World Bank official and former Goldman Sachs is now considered the main candidate to succeed the Frenchman Jean-Claude Trichet, who is leaving office in October. The Italian Economy Minister Giulio Tremonti said on Wednesday it had officially Draghi's name on a document to the finance ministers of the eurozone, which will meet on Monday. Draghi
assume leadership of the ECB at a time when Europe is entering a new and drastic phase of its debt crisis, which has already been two years. There are growing concerns that Greece, which just last year he received a ransom of 110,000 million euros of its eurozone partners, is unable to stabilize its finances, as promised. In addition to Greece, where public workers on Wednesday made a huge strike in protest against government austerity measures, Portugal is also preparing to implement national severe cuts in public sector employment and welfare privileges.
Italy itself is struggling with one of the biggest public debts in the eurozone. The dubious record country's economic, including outbreaks of high inflation, long been considered a disadvantage for the probabilities of the Italian central bank's directors to achieve the top position of the ECB.
Still, there is little evidence that moderate Draghi ECB anti-inflation stance to help the weaker economies in the eurozone.
"My impression is that it would follow very closely in the mold by Trichet in terms of not wanting to do anything to spoil the ECB's credibility in dealing with the risks of inflation," said Peter Hooper, chief economist at Deutsche Bank Securities in New York.
"Given some of the political concerns about the debt situation of Italy, my impression is that they probably would do anything to dispel concerns that may have a tendency to be soft."
Source: WSJ
According to colleagues on the board of the ECB Draghi last month was a strong supporter of the first rise in ECB interest rates in nearly three years, even though the Italian economy may be the most affected by higher interest rates. Similarly, during the recent restriction of the ECB monetary cycle, which occurred mainly in 2006 and 2007, Draghi was in the minority faction, pressing more pronounced by higher interest rates, according to several colleagues.
"is very close to our agenda for stability and strong economy," he said Merkel in an interview with the newspaper Die Zeit, which supported the candidacy of Draghi.
Draghi, a native of Rome, forged his economic credentials as a PhD student at Massachusetts Institute of Technology in the late 1970's. After teaching at the University of Florence and then spent six years as executive director of the World Bank, Draghi, father of two children, returned to Italy in the early 1990's. It was a key figure in the Italian Treasury when the country was expelled from the European exchange rate mechanism, devalued its currency, lost confidence in the bond markets and was on the brink of cessation of debt, a situation similar to Greece alive today.
"The main lesson we learned then is relevant now, is how markets can exacerbate domestic situations," says Lamberto Dini, a senator and former Italian prime minister at that time was one of the top-ranking officials of the Bank Italy.
In later years, Draghi spearheaded one of the largest privatization campaigns ever seen in Europe: the sale of stakes in banks, energy and telecommunications firms, and highways, which amounted to 10% of Italy's economic output. He earned the nickname "Super Mario" in the Italian press.
In 2002, Draghi left Italy to enter the private sector, serving for three years as vice president of the international arm of investment bank Goldman Sachs in London. His time at Goldman, one of the banks that took the spotlight during the recent global financial crisis, initially raised questions among some critics of his nomination to the ECB.
After three years in London, Draghi returned to Italy to lead the country's central bank, using what many characterized as a wave of modernity to the institution. He ordered that senior executives had blackberries, for example, that could communicate more easily with them.
Within a year, Draghi's leadership in the Bank of Italy was overshadowed by an even greater international role, to put forward the so-called Financial Stability Forum, a group of senior financial officials in charge of reforming the financial rules of the world.
Since its pedestal in the FEF, Draghi helped shape part of the initial planning for financial regulatory reform after Lehman Brothers collapsed in September 2008. In April 2009, were expanded responsibilities of the group, and the name was changed to Financial Stability Board to include members of emerging market countries. The group received more formal authority and made recommendations on issues such as possible restrictions on bonuses of bankers and bank capital requirements.
The FSB, colleagues say, was a test of diplomatic skills Draghi. At the inaugural meeting of the group in 2009, a dispute erupted when Saudi Arabia and other emerging market countries complained that they did not have enough voice in the responsibilities of the group, according to several people familiar with the meeting. To ease tensions, Draghi made a joke he once heard from former Secretary of U.S. State, George Shultz.
"Why do the French kiss the hand of a woman?" Draghi said the group locked in recriminations, according to two people present. "You have to start somewhere." Meant, according to his colleagues that the group could not afford a stalemate for technical disputes only in the beginning of business.
Last year, while the debt crisis raging in Europe, Draghi played a key role in the decisions of the ECB. In particular, the critical weekend of 8 and 9 May 2010, the bank pondered whether to buy bonds of countries vulnerable Europe, including Greece. Like others in the ECB Draghi hated taking that drastic step, according to officials who participated in the talks.
Axel Weber, president of the Bundesbank of Germany, then said publicly that he had opposed the decision. But officials say Draghi believed that doing nothing was threatening to jeopardize the central role of the ECB to maintain its control over interest rate policy. His position helped others to change their minds, these people say. Although it was criticized in some circles, many economists attributed the decision to go ahead with the bond purchase plan have prevented a major crisis is propagated by the euro bloc.
"There is a quality about him that makes people go to him for leadership," says Robert Rubin, former U.S. Treasury secretary, who met Draghi 20 years ago at a dinner in Rome. "He likes to tackle problems and work to solve them."
0 comments:
Post a Comment