Features

The troubled legacy of Mario Draghi, saviour of the euro

Mario Draghi may have rescued the euro in its darkest hour, but failed in his only official mission of keeping inflation within its target range.

Mario Draghi © FREDERICK FLORIN/AFP/Getty Images

It is no exaggeration to say that Mario Draghi rescued the euro "in its darkest hour", writes Simon French in The Times. The outgoing president of the European Central Bank (ECB) handed over the reins to former International Monetary Fund chief Christine Lagarde this week after a tumultuous eight years in the job.

"Whatever it takes"

The great paradox is that "Super-Mario" saved the euro yet failed in his only official mission, says Pierre Brianon on MarketWatch. The ECB is meant to keep annual inflation "below but close to 2%". The bank has missed that target every year since 2013, with eurozone inflation coming in at just 0.8% in September. And for all the plaudits, Draghi leaves the ECB on a "sour note", says Tom Fairless in The Wall Street Journal. A decision in September to cut a key interest rate to -0.5% and restart quantitative easing has opened up deep divisions.

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Officials from northern countries question the effectiveness of more easing and point out that at this rate the bank will run out of eurozone bonds to buy by the end of 2020. The ECB will then either have to break its own "self-appointed limit of buying no more than a third of outstanding bonds" or turn to buying assets such as "bank bonds and equities". Negative rates are also unpopular: German tabloid Bild once labelled Draghi as "Count Draghila", the vampire sucking the German saver dry.

Don't fight Frankfurt

The "stunning phenomenon of negative rates" has yet to boost eurozone stocks, says John Authers on Bloomberg. The region's markets have underperformed "spectacularly" during Draghi's tenure. That leaves them looking cheap on a relative basis. "Perhaps the best that can be said of the Draghi legacy for equity investors is that he might have created an almighty long-term buying opportunity."

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