Saving the euro from itself is a work in progress for the ECB’s Draghi

caption
Mario Draghi, the European Central Bank president, at a news conference at the ECB headquarters in Frankfurt.
source
Thomson Reuters

The euro was born in 1999, and so it is still technically just a teenager. Growing pains and volatility are to be expected.

Still, the defensive tone of Monday morning’s European Parliament testimony by the currency’s chief steward, European Central Bank President Mario Draghi, speaks to the currency union’s especially troubled youth.

Draghi, who helped ease the euro’s deepest crisis in 2012 with the three simple words “whatever it takes,” still seems to be doing whatever he can to fend off the currency union’s vocal detractors. Earlier in Draghi’s tenure at the ECB, his primary critics came from Germany, where officials worried the central bank’s easy money policies might help weaker economies while generating inflation for Germans – a fear that repeatedly has proved unfounded.

But now, with presidential elections looming in France in the wake of right-wing political victories in Britain and the US, the magnitude of the existential threat to the euro only seems to have become greater.

“It is easy to underestimate the strength of this commitment,” Draghi said. “But that would overlook the progress we have made. With the single currency, we have forged bonds that survived the worst economic crisis since the Second World War. This was in fact the original raison d’être of the European project: keeping us united in difficult times, when it is all too tempting to turn against our neighbors or seek national solutions.”

It’s not hard to understand why Draghi chose to speak of the common currency in such broad, historical terms. This was Draghi’s message to the continent’s nationalists, like France’s Marine Le Pen, who would like to dissolve the euro.

He also didn’t mince words when it came to the Trump administration’s recent accusation that Germany was manipulating its currency by undervaluing the euro, rejecting the claim outright. Trump’s is a curious claim considering Germany has also been calling for higher interest rates, which would most likely be accompanied by a stronger euro.

Draghi, however, still had a word for his less radical, pro-euro German critics.

“The objective of Economic and Monetary Union should be to strive to achieve ‘economic and social progress’ as was the intention of the signatories to the Maastricht Treaty,” Draghi said. “And for this, we need sustained growth and job creation.” He then went on to list the economic stabilization and improvement seen in the past few years in detail, adding “our monetary policy has been a key contributor to the positive economic developments I have described.”