What did "whatever it takes" take (and from whom)?
- Five years ago, European Central Bank President Draghi said the ECB would do "whatever it takes" to keep the euro. What has been done?
- The euro still exists. Five years ago, it seemed fragile – to some. Today, investors rarely question whether the euro will survive.
- The ECB has created around EUR 1.2trn of liquidity (through bond purchases).
- A mix of ECB action and national regulation keeps bond yields below "fair" economic value.
- The ECB effectively put a tax on savers and banks which helps Eurozone governments.
- By buying bonds, the ECB also signalled to investors that policy interest rates would remain lower for longer.
- The 2014 euro weakening boosted exporters' profits. The impact of a weak euro on real economic growth is limited, however. Whether the ECB can take credit for the weaker euro is debatable.
- What the ECB has achieved is lower fiscal and financial costs during a period of structural change. This helped smooth the move to today's euro area cyclical recovery. Eurozone unemployment can fall further and growth should remain good (if slower than today's pace). This will allow Draghi to start to tackle his addiction to easing.