Mario Draghi may go down in history as the man who saved the euro, thanks to his August 2012 market-stunning remark that the European Central Bank would do “whatever it takes” to save the common currency. He has lately embarked the ECB on the controversial path of “quantitative easing,” whereby the central bank is buying €60 billion worth of government bonds monthly to shore up inflation in the eurozone. At the mid-point of his single, eight-year term, here’s an overview of Draghi’s career.
Married, with two children, Draghi was born in Rome in 1947. His parents died when he was 15. After concluding his secondary education in Massimiliano Massimo Institute, a Jesuit school, he went on to graduate from the La Sapienza University of Rome.
1975-1991 Academia
In 1977 Draghi earned his doctorate degree from the Massachussetts Institute of Technology in the United States. One of his teachers there was Stanley Fischer, now the vice-chairman of the U.S. Federal Reserve. He wrote his thesis, “Essays on Economic Theory and Applications,” under the supervision of Franco Modigliani and Robert Solow, who both would later win the Nobel Prize for economics.
Draghi returned to Italy for an academic career, teaching economics first at the University of Trento from 1975 to 1978, then at the universities of Padua and Venice. He became a full professor at the University of Florence from 1981 to 1991, and was an executive director at the World Bank from 1984 to 1990.
Horst Kohler (L) Managing Director of the IMF, greets Donald Johnston (R) Secretary General of the OECD, and Mario Draghi, Chairman of the WP3 and director of the Italian Treasury, before the start of the Group of 10 Ministers meeting 29 April 2001, in Washington, DC. LESLIE E. KOSSOFF/AFP/Getty
In 1991, then-Italian prime minister Giulio Andreotti appointed Draghi as director general of the Italian Treasury. Mario would held this position through nine governments until Berlusconi arrived office in 2001. At the treasury, Draghi was chairman of the committee responsible to review Italy’s financial legislation. He helped Italy shrink its annual budget deficits while stabilizing interest rates, allowing the country to participate in the European monetary union in 1999.
2002-2005 Goldman Sachs
In 2002, Draghi became vice chairman and managing director of Goldman Sachs International. He was tasked with guiding the firm’s senior management on European strategy and on global expansion. He held the job until 2005.
After it was known that Greece hid €5.3 billion of debt using currency swaps involving Goldman Sachs, questions were raised about how much Draghi knew about the complex financial deals between Athens and the U.S. bank. In June 14, 2011, in his confirmation hearing for the ECB presidency at the European Parliament’s economic and monetary committee, Draghi said that he “had nothing to do […] whatsoever” with the deal between the Greek government and the bank, which “had been undertaken before [his] joining Goldman Sachs.”
2006-2011 Bank of Italy
In December 2005, Draghi is appointed at the helm of the Bank of Italy to replace Antonio Fazio, who had been accused of rigging the competition for the takeover of Italian lender Banco Antoveneta. Draghi worked to restore the central bank’s tarnished reputation. As governor of Italy’s Central bank, he became a member of the ECB’s governing council. He also was appointed chairman of the Financial Stability Board, the international body set up to monitor the financial system.
Mario Draghi (L) and former governor of the Bank of Italy, Antonio Fazio (R) as they meet in Rome in May 2001. EPA/PHOTOROLA
2011: Baptism of fire
Draghi succeeded Jean-Claude Trichet as head of the ECB on Nov 1. 2011. He had become the favorite for the job after the previous front-runner, Axel Weber, resigned as chief of the German Bundesbank. Weber’s fierce criticism of the ECB’s monetary policy had made his appointment impossible, after it was opposed by major member states such as France.
Some northern European countries then worried about a representative from Italy — with its high fiscal deficit and debt — taking over the ECB presidency. But Draghi, who had most often sided with the “hawks” within the governing council, eventually won backing from Angela Merkel and the influential Bild Zeitung.
Bild even pleaded for honorary German citizenship’for Draghi.
BBC Radio profiled Draghi at the start of his ECB Presidency:
2012: Man of the year
Just a few months after Draghi took office, as the Greek crisis deepened and contagion threatened to topple other troubled economies, financial markets were openly betting on the end of the euro. In July, 2012, Draghi warned markets that the ECB would do “whatever it takes” to preserve the common currency. “And believe me, it will be enough,”he ad-libbed in his prepared text. That marked a turning point in the eurozone crisis. Draghi was named ‘Man of the Year’ for 2012 by the Financial Times.
2014: Banking Union
Following the 2012 decision of eurozone leaders to move towards a banking union and task the ECB with the overall regulation and supervision of the banking system, the “Single Supervisory Mechanism” became operational in November, 2014. Operating independently from the monetary policy arm of the ECB, it directly supervises the monetary union’ s 122 “significant” banks — representing more than 80 percent of the eurozone’s banking assets. The ECB can also at any time take over the direct supervision of any of the monetary union’s other 3,500 banks.
A complicated relationship… Photo by Getty
2015: Time for QE
After previous ECB measures seemed to have run their course, Draghi urged the governing council in January to pledge asset purchases of about €1.1 trillion in order to boost inflation and growth in the eurozone. The so-called quantitative easing (QE) program, which started being implemented in March, raised opposition, in particular in Germany. Its aim is to keep interest rates low by taking financial assets such as sovereign bonds off the balance sheet of the banking sector.
Si Wolfgang…si. Photo by AFP/Getty
The eurozone economy’s lackluster performance pushed Draghi to announce in October the ECB’s readiness to extend the program beyond its originally scheduled end date of September, 2016.