This is the man who claimed he can save the euro. After weeks of uncertainty, European Central Bank’s chief Mario Draghi on Thursday unveiled a much-awaited bond-buying plan. The scheme includes buying ‘unlimited’ amounts of short-term government debt from troubled countries and it is designed to lower the borrowing costs of Italy and Spain. Draghi also said the scheme was a “fully effective backstop” and that the euro was “irreversible”.
But the ECB will only intervene if debt-ridden countries request financial aid from the eurozone rescue fund and only under strict conditions. “If the Central Bank were to intervene without any action on the government side, without any conditionality, it would not be effective”, Draghi said.
But not everyone on the ECB’s governing council agreed with Draghi’s attempt to rescue the single currency. Earlier this month, Germany’s Bundesbank president showed strong opposition to the idea. He warned that debt-laden countries could excessively rely on the ECB and therefore, fail to implement tough economic reforms.
While Mr Draghi was announcing the ECB’s plans, German Chancellor Angela Merkel was meeting Spanish Prime Minister Mariano Rajoy to discuss the eurozone crisis. Spain has so fur refused to ask for a full-blown bailout.