“A promise by European Central Bank President Mario Draghi to “do whatever it takes to preserve the euro” remains the hot topic of investor debate this morning.
Analysts immediately interpreted Draghi’s statements as a commitment to do something big, in particular either return to purchasing Italian and Spanish bonds (known as the SMP program) or offer new, even more potent long-term refinancing operations that would pump new liquidity into the system. Draghi had qualified that he would have to work within the confines of the ECB’s mandate, and such measures have been among the bank’s most potent actions so far.
Nonetheless, there is good reason to doubt that even these measures are forthcoming, or that they would be truly significant if implemented:
- Yesterday, officials at the ECB played down the importance of Draghi’s comments, arguing that he has said similar things before.”
