Departing ECB president Mario Draghi tried to restore unity among eurozone central bankers in his farewell speech on Monday (28 October) but he continued to defend his recent controversial monetary decisions.
Draghi passed the European Central Bank presidency baton to former IMF managing director Christine Lagarde in a critical moment, rounding off his farewell tour.
Deteriorating global confidence mixed with trade and geopolitical tensions forced the ECB to restart its bond buying programme in September, and to cut deposit rates further into negative territory.
The effectiveness of the decisions were questioned by members of the ECB’s governing Council, including France, Germany, Austria and the Netherlands.
But as his mandate expires on 31 October, he highlighted the shared “never accept failure” goal among the ECB’s governing council members, as well as the inflation target of below-but-close to 2%.
Draghi praised their “consistent and unconditional commitment to our mandate” of price stability.
“You can look back with satisfaction on what you achieved in extremely testing conditions, and in the knowledge that you have improved the welfare of many people,” he told the audience, including French President Emmanuel Macron, Italian counterpart Sergio Mattarella, German Chancellor Angela Merkel and Lagarde.
“What unites the Governing Council has always been – and will always be – much greater than anything that might divide it. We all share the same devotion to our mandate and the same passion for Europe,” he added.
During his speech, Draghi called once again for a eurozone budget to equip the region with the right tools against sudden economic shocks.
The Italian banker made a similar plea in his final words to the European Parliament in September and after his last Governing Council on 24 October.
Draghi elaborated on the reasons why a common fiscal cushion for the euro area is necessary.
“National policies cannot always guarantee the right fiscal stance for the euro area as a whole,” given the complexity of coordinating decentralised fiscal policies, and the low impact of the national fiscal stimulus on neighbouring economies
For that reason, he called for an “euro area fiscal capacity of adequate size and design: large enough to stabilise the monetary union, but designed not to create excessive moral hazard.”
Draghi warned that setting up this eurozone budget could take a long time, and “there will be no perfect solution”.
In order to overcome the existing barriers, he said that Europe might need “an urgent cause”, such as the fight against climate change, to bring the necessary “collective focus” to create the eurozone budget.
In his remarks, Draghi did not make a reference to the budgetary instrument for convergence and competitiveness, the watered-down version of the eurozone budget that member states are finalising.
Draghi claimed that, in a monetary union with 19 countries, political leaders must transcend “national perspectives” and explain the euro area perspective to their domestic audience.
“I am grateful that we have had such leaders in Europe,” he said about Macron, Merkel and Mattarella, as he thanked them for their support throughout the crisis years.
Merkel said Draghi paid an “outstanding” service to Europe and would leave “large steps” behind him.
She thanked Draghi for ensuring price stability in recent years, and said how the ECB’s independence was a “protection” when policymakers disagreed with what he did.
Macron praised his knowledge, courage, humility and, above all, his humanism.
“You were always aware what was more important than words and figures,” Macron said, adding that he always had the public interest as his “compass”.
For that reason, Draghi won his place among the EU’s founding fathers, Macron added.
Lagarde, who on Monday joined the governing council’s meetings, highlighted his wisdom, determination and his “commitment to the people of Europe”.
“You showed you cared for people,” she said.
[Edited by Sam Morgan]