Draghi legacy: a sturdy European Central Bank

By Hu Kun (Original source China Daily)

“With Mario Draghi set to retire as president of European Central Bank on Oct 30, people are wondering whether his legacy would influence his successor, and whether the ECB and the eurozone would continue to perform well.Eight years ago, the eurozone’s financial credit and liquidity market shrank dramatically as a result of the 2008 global financial crisis. To rescue the market, the ECB adopted a wide variety of nonstandard measures, such as the euro-denominated covered bonds purchase program, securities market program and longer-term refinancing operations－which are liquidity with low interest rates.

But since the eurozone lacks the lender of last resort mechanism due to its special political structure, the lingering panic in the market caused the liquidity crisis to worsen. Consequently, the eurozone was on the verge of collapsing owing to the continuous accumulation of systemic risks.”

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