Saving Europe

Mario Draghi: 'There Is No Plan B'

Draghi2-BertBostelmann
Mario Draghi weighs his options in an interview.
  • Why it matters

    Why it matters

    Mario Draghi is arguably the most powerful policymaker in Europe at the moment, holding sway over monetary policy for the 19-nation euro zone economy.

  • Facts

    Facts

    • Mario Draghi has been president of the European Central Bank since 2011 and has an eight-year mandate.
    • Mr. Draghi previously served as head of Italy’s central bank.
    • The Frankfurt-based ECB is responsible for monetary policy and supervising the largest banks in the euro zone.
  • Audio

    Audio

  • Pdf

It is not easy to reach Mario Draghi at his new headquarters, a shiny new skyscraper that houses the European Central Bank in the east of Frankfurt. Mr. Draghi, who has been president of the ECB since 2011, enjoys a grand view from his office at the top, which takes two elevators and a security control to reach.

In an interview with Handelsblatt, Mr. Draghi acts more Prussian than his native Italian. As the ECB prepares to launch a U.S.-style quantitative easing program this year, Mr. Draghi makes a plea to governments to carry out their responsibilities, too. Without structural reforms, it is clear that the ECB’s monetary policy will be less effective.

Mr. Draghi’s policies have been praised in many parts of the world, but the doubts and concerns are perhaps biggest in Germany, a country that remembers all too well the dangers of hyper-inflation. Mr. Draghi patiently answered questions from Handelsblatt’s publisher and editors in chief, as well as those of 294 Handelsblatt readers who submitted their own questions in advance. Will the euro remain as a currency? What will happen to people’s savings in this era of low interest rates?

 

Handelsblatt: Mr President, the Pope is of the opinion that, these days, Europe is looking old and sick. Do you share his opinion?

Mario Draghi: Europe needs to regain its self-confidence after the crisis. This cannot happen by miracle. It hinges upon European governments and European institutions. It requires the introduction of reforms and a stable financial framework. This way, European citizens will regain confidence in their future and their opportunities. Confidence is the prerequisite for a society in which people buy and invest. Europe can do that and I am firmly committed to that goal. The Pope says that, also for the sake of the rest of the world, Europe should regain youth and health, and it is in our power to make it happen.

What is causing this lack of confidence that you refer to?

It is a legacy of the various crises that happened in 2008 and 2009, which clearly revealed the weaknesses in the old framework.

And what did you find?

We found that the debt levels of banks and nation-states were too high. Important rules of a market economy – for example, the rule that risk and responsibility go hand in hand – had been forgotten. All this contributed to shatter the confidence of many people in Europe. This is why Europe is in need of structural reform. I have been saying this for a very, very long time. I can only repeat it.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.