While the eurozone‘s future often seemed in doubt during 2012, the head of Europe‘s central bank eased the fears of its collapse by promising the bank’s full-fledged support to keep the euro alive.
Mario Draghi, who was appointed president of the European Central Bank in November 2011, squelched the abiding rumors that the euro was headed for a fall and that the eurozone itself might break up when he declared in July that the bank would do whatever it took to save the currency used by the zone’s 17 members.
As of the first week of January this year, the euro hovered around $1.33 in comparison to a year ago when it was at $1.19. Think back a year and recall that there was tremendous concern about the euro zone’s sovereign debt and bank funding issues.
A Global Atlanta interview in February with Vassilios Gouloussis, Greece‘s consul here, dramatically revealed the suffering that austerity measures were exerting on his country.
The tension surrounding the future of the European Union was palatable during the Euro 2012 soccer quarter finals pitting Germany vs. Greece. Global Atlanta found that the poltical and economic issues lay just under the surface at the Fado Irish Pub in Buckhead as supporters for both sides watched the game that Germany won 4-2 only to be defeated in the semi finals by Italy.
While economists aren’t apt to think in terms of the “Great Man” view of history, nevertheless they should take a moment out to give Mr. Draghi his due.
There’s no questioning that by promising that the ECB would buy unlimited amounts of government bonds from members of the European Union, he provided the reassurance that the currency needed to survive the immediate crisis.
In September, when he explained the bank’s support for the European Stability Mechanisms, he showed how it would be done.
At this point, the Georgia Institute of Technology hosted a seminar concerning EU banking reforms during which a variety of viewpoints from Atlanta’s consular community were voiced, ranging from outright skeptism of the Greek consul to full hearted support for reforms by Ireland‘s consul general, Paul Gleeson.
Global Atlanta conducted interviews with Christoph Sander and Denis Barbet, newly arrived consuls general from Germany and France in the fall of 2012 and both expressed their relief that at least the show would go on.
But for how long? Is Mr. Draghi’s new year declaration that Europe will pull out of recession in 2013 enough?
This year will show whether paper bonds can staunch the ongoing bleeding of the union’s economically weakest members.