Super Mario!
Speaking to financiers, investors and policymakers in London on July 26, 2012, Draghi was explaining what his institution had already done to make the euro unassailable when he added, as if ad-libbing: “There is another message I want to tell you. Within [its] mandate, the ECB is ready to do whatever it takes to preserve the euro.”
Pause.
“And believe me, it will be enough.”
No one knew exactly what the ECB president had in mind, nor how much was “enough.” But the euro rallied and within 24 hours, Merkel and France’s President François Hollande backed Draghi.
The ECB would soon announce a plan to buy bonds of troubled governments in exchange for reform commitments — which never had to be used, because Draghi’s threat had convinced the markets. Nobel laureate economist Joseph Stiglitz has called the speech a confidence trick. “It may have been indeed, but it worked, didn’t it?” responded one eurozone central banker.
Perfect transionality.
