London Daily

Focus on the big picture.
Tuesday, Oct 07, 2025

'Super' Mario Draghi sworn in as Italy's new PM - can he save its economy like he saved the euro?

'Super' Mario Draghi sworn in as Italy's new PM - can he save its economy like he saved the euro?

Mario Draghi's life and career may have prepared him for becoming prime minister but he'll have to navigate treacherous waters.

In 2012, the Eurozone was facing an existential crisis, with the future of the euro itself in doubt.

Investors were seeking an ever-greater premium to lend to countries like Spain and Italy and there was real concern in European capitals that at least one country might have to be ejected from the single currency zone. Greece, in particular, was thought likely to default on its debts.

It is no exaggeration to say that one man, more than any other, prevented that from happening.

Mr Draghi, then ECB boss, receives a gift from European Parliament members in 2019


He telegraphed his intentions with a single phrase, uttered at a global investment conference at Lancaster House in London on 26 July, 2012: "Within our mandate, the European Central Bank is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

That man was Mario Draghi.

Astonishingly, his comment was unscripted - his way of trying to pour water on the wildfire of speculation that was blazing in Eurozone sovereign debt markets at the time. He did not actually have concrete plans in place, at the time, to tackle the crisis.

He later told the Financial Times: "I had reflected, consulted and deeply thought about the appropriate message."

But the third president of the ECB proved to be as good as his word.

That September, Mr Draghi launched a programme called Outright Monetary Transactions (OMT), under which the ECB bought bonds issued by governments in the Eurozone with a maturity of between one to three years.

The aim was to lower the yield of those bonds - effectively a measure of the return an investor wants for lending to a bond issuer - and to reduce the short-term cost of borrowing for the Spanish and Italian governments in particular.

This type of policy is something Europeans are now used to but, in September 2012, this was a revolutionary step.

Germany's powerful central bank, the Bundesbank, was furiously opposed to the idea on the basis that it would remove pressure on those governments to adopt the kind of austerity measures needed to bring down their deficits in such a way as to reassure the bond market.

To allay its concerns, conditions were applied to OMT that were as strict as those attached to the bailouts given to Ireland, Portugal and Greece.

Mr Draghi, during his time as president of the European Central Bank


The Germans, historically the most inflation-conscious people in Europe following their disastrous experience with hyper-inflation between 1921 and 1923, also fretted this effective money-printing would unleash a surge in the cost of living.

Yet before long it became clear that deflation - a protracted fall in the price of goods and services - was the bigger threat.

Mr Draghi's response, in March 2015, was to launch a full blown programme of Quantitative Easing with mass purchases of both government bonds and corporate debt. Unlike OMT, which sought to bring down specific borrowing costs for particular countries, the aim here was simply to prevent deflation.

At its launch, the ECB promised to spend at least €1.1trn, but by December 2018, when it formally ended the programme, more than €2.6trn had been spent.

Mr Draghi, who was at the time preparing to hand over the reins to Christine Lagarde, announced in September 2019 that the scheme was being revived.

He also cut the ECB's main policy rate from -0.4% to -0.5% - incurring the wrath of Germany's politicians and the country's best-selling newspaper, Bild, which mocked up a front page picture of him with fangs and a cape as it raged that 'Count Draghila' was "sucking our accounts dry".

With the benefit of hindsight, Mr Draghi was generously taking unpalatable decisions towards the end of his tenure so that he would get the blame, rather than expose Ms Lagarde to clashes with the Germans early in her tenure.

Now the man who earned the nickname 'Super Mario' faces an immense task as he becomes the latest prime minister of his native Italy.

Mr Draghi meets members of Italia Viva party during talks on forming a new government


It was not something the father-of-two could have expected as he hunkered down during the COVID lockdown at his home in Citta della Pieve, near Perugia in Umbria.

In many ways, 73-year old Mr Draghi's life has prepared him for this moment.

Born in Rome - he supports AS Roma football club - he was just 15 when his father, who had worked for the Italian central bank, died. His mother died soon afterwards.

He told the German newspaper Die Zeit in 2014: "I can remember when, as a 16-year-old, I came back from holidays at the sea with a friend. He went home and could do what he liked.

"I, by contrast, was confronted with a stack of letters that I had to deal with, bills that had to be paid. But young people do not reflect on what they have to deal with and how they should do so. They simply get on with it.

"That is important, that is what prevents them from becoming depressed even in adverse circumstances."

It was just before 1968 - when students across Europe of his generation began rebelling against the system.

But not Mr Draghi, as he recalled to Die Zeit: "My hair was quite long, but not very long. And, that aside, I did not have parents whom I might have rebelled against."

Following his time at a Jesuit school and graduating in economics at La Sapienza university in his home city, Mr Draghi took a PhD at the Massachusetts Institute of Technology, where he was taught by no fewer than five Nobel Prize-winning economists.

His classmates included Ben Bernanke, later chairman of the US Federal Reserve and Paul Krugman, another Nobel Prize winner.

His five years in the US were followed by a glittering rise through the ranks of the Italian civil service, its Treasury and the Bank of Italy as well as a spell at Goldman Sachs, the Wall Street investment banking giant, before he succeeded Jean-Claude Trichet at the ECB in 2011.

Reforming Italy's economy and bringing order to its public finances, while at the same time bringing together the exotic mosaic of warring factions which characterise the country's dysfunctional political system, will be enormous challenges.

However, if anyone is capable of navigating those treacherous waters, it is the man who saved the euro.

Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×