How the world sees Greece
Greece has to pass a review of its bailout programme and show a commitment to reforms before the European Central Bank can start buying its bonds as part of the bank’s asset purchase programme, ECB President Mario Draghi said on Thursday. Greece has so far been excluded from the quantitative […]
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Athens, September 4, 2015/ Independent Balkan News Agency By Spiros Sideris The four conditions to enable Greece to join the quantitative easing program (QE) of the European Central Bank (ECB, as well as that the ECB was the one that prevented the participation of depositors in the recapitalization of Greek banks (bail in), revealed the […]
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European Central Bank President Mario Draghi discussed the possibility of the ECB purchasing Greek bonds, during a press conference in Frankfurt on Thursday. Draghi clarified that for the ECB to purchase Greek bonds, whose low credit rating does not fulfil the ECB’s credit rating requirement, Greece needs to show that it is implementing the reforms and measures agreed in the
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Asian markets make gains... but the FTSE100 dips into negative territoryOil extends its rise after the biggest one-day price increase in 6 yearsUK GDP confirmed at 0.7% growth in Q2Greece has a new finance minister: Yiorgas Houliaràkis Central bankers head for the hills 4.31pm BST With the FTSE 100 hovering around the unchanged mark and the Dow Jones industrial average on Wall Street similarly flat on the day, there is tentative talk that calm has returned to markets.Translated into Twitter-speak (using a cute cat, naturally), that’s:Stocks today vs. this week @CNBC pic.twitter.com/frj9Tk7xPg 4.27pm BST Central banks are very much in focus over coming days and policymakers’ words will be scrutinised for hints their fingers will be kept off the rate hike trigger for now given the latest market turmoil and signs global growth might have lost some steam. In the case of the ECB attention will be on clues to further loosening.After the Jackson Hole meeting of central bankers in Wyoming over this weekend, when the Bank of England’s Mark Carney is set to speak, attention will shift to the ECB’s latest decision on policy for the eurozone next Thursday and particularly the accompanying press conference by president Mario Draghi.On balance, we expect the ECB to reiterate its easing bias, using the same language used at the July meeting, when the risk of Grexit seemed imminent. At this stage, we would not expect the Bank to take any tangible policy actions, e.g. , by increasing the pace, the scope or the overall size of its QE programme. But we would not completely rule out any action either. No change is expected with the refi rate likely to stand on hold at 0.05% and QE continuing at a pace of €60bn/month.Most interest will, as ever, be focused on Mario Draghi’s press conference, where questioning is certainly set to focus on the recent market turmoil. But attention will also be on the outlook for ECB policy in light of a return in disinflationary pressures following the continued fall in commodity prices and a stronger euro. Recent comments from the Vice President, Vítor Constâncio, and Chief Economist, Peter Praet suggested the Governing Council would be willing to consider additional supportive action should it be warranted. Continue reading...
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Asian markets make gains... but the FTSE100 dips into negative territoryOil extends its rise after the biggest one-day price increase in 6 yearsGreece has a new finance minister: Yiorgas Houliaràkis Central bankers head for the hills 9.10am BST A sense of of déjà vu has returned to Athens this morning with the announcement of a new interim government.With three women in top posts, including Vassiliki Thanou who takes over as prime minister, the new 22-member cabinet will be sworn in at 1 PM local time (11am BST). The inauguration of the interim government, which will lead Greece to polls on September 20, marks the official start of the election campaign. In a pithy 32-word statement to the leftist newspaper Avgi, the outgoing prime minister Alexis Tsipras said: Today the big election battle begins. The Greek people will give a powerful mandate [to the next government] for the present and the future. Greece cannot go back. And it will not go back. It will go forward.” 9.03am BST We haven’t even had September’s snap election in Greece, but political insiders are already talking about a second autumn poll.Stavros Theodorakis, leader of the centrist To Potami party, told Kathimerini that former Greek Prime Minister Alexis Tsipras’s refusal to cooperate with pro-European parties after next month’s ballot may complicate the formation of a government and force a new poll.The risk is that if SYRIZA doesn’t get an absolute majority in parliament, that if the allies it wants don’t make it to parliament, then we’ll go to new elections again in November and December. Trained at the Sorbonne in Paris, the 65-year-old mother of three has been described by those who know her as a stickler for detail and “deeply principled.” In the five years that Greece has battled with the demands of international creditors, she has played a leading role as a trade unionist protecting colleagues from pay cuts exacted on the judicial sector. Continue reading...
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LONDON, Aug 21 (Reuters) - This month's sharp rally in Greek government bonds has gone into reverse as early elections increase uncertainty over ...
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Everything seems to be going wrong in the global economy right now. Chinese growth is slowing, Hong Kong's Hang Seng is officially in a bear market, Greece is heading into elections, and emerging markets around the world are feeling the strain of the strong US dollar. In the advanced world, the United States and United Kingdom are seeing some decent growth, while Japan and the eurozone are expanding modestly at best. And the next important question for everyone is whether the US Federal Reserve thinks the backdrop it's looking at is good enough to raise interest rates for the first time in nine years. The Fed funds rate has sat at 0.25% since December 2008. September has been penciled in as a strong possibility for a long time now, though markets are now starting to reconsider. What's the worst that could happen? Well, it could be like 1937 again. In late 1936, the US economy was looking relatively good for the first time in a while. The unemployment rate had fallen by between 5 and 10 percentage points from its post-crash high (accurate estimates weren't kept at the time), the economy was growing, and markets had rebounded considerably. There were a bundle of different things that then contributed to the 1937 recession — including tax hikes; a change in the US Treasury's policy on gold, explained here; and an increase by the Federal Reserve in bank reserve requirements. The hike only caused a pretty small spike in Treasury yields, in comparison to the levels that were common before the 1929 crash. Bank of America Merrill Lynch produced these charts for a note back in June: But that tiny jump following the rate hike did not have small effects on stocks or the economy. The Dow Jones Industrial Average was cut in half, falling by 49% in 1938: The real economy took a beating, too. After a prolonged period of falling unemployment in the mid-1930s, jobless numbers began to climb again after the rate hike. The 1937 episode had a huge influence on economic policy in the future. It's one of the episodes that Milton Friedman argued that shocks to the monetary base of an economy, which are ultimately controlled by central banks, are the general cause of recessions. So what's the risk for the world today? The tools are slightly different, but the situation bears many similarities. After a major financial crisis and recession, the US was trying to find a way to normalize economic policy, just as it is today. In recent years other parts of the world have already had the problem that the Fed may soon face. The eurozone, for example, hiked interest rates in the middle of 2011, before having to backtrack quickly afterward. No central bank wants to do that at the moment. Those that want to hike rates soon — like the Fed and Bank of England — want to keep doing so slowly over the following couple or few years. A slow, gradual upward increase is what they're aiming for, so they need the economy to be strong enough to manage that. Back in September 2014, US financial economist Robert Shiller warned about the parallels between the state of the global economy now and in 1937. You could sum up the reasons that the world doesn't look ready for a rate hike by the Federal Reserve easily: Growth in Europe and Japan is still pretty anemic. Their central banks look more likely to ease than hike interest rates and won't prop up global demand if the US falters. US interest rate hikes usually mean a stronger dollar. US currency has already strengthened considerably, and countries with dollar-denominated debt will struggle more to service it. The US recovery looks good, but not amazing. Wages are rising, but not at the sort of pace generally seen before the crisis. Retail sales rose by 2.4% in the year to July. Economic growth is solid rather than stellar. Inflation is nowhere to be seen. Tumbling oil prices have sent inflation to basically zero across the world's advanced economies. For good reason, the Fed wants to hike interest rates before inflation is back at its 2% target, since small rate hikes won't immediately slow down the rising prices. But the Fed needs to really be quite sure that rates are headed in that direction before it pulls the trigger. Some of these things matter to the Fed and some of them don't. Janet Yellen, the Fed chairwoman, won't change her mind based on whether an Indonesian business can repay its dollar-denominated loans. But it is relevant for the world as a whole. The dollar is the world's reserve currency, and what happens in Washington absolutely does not stay in Washington. Michael Arone at State Street makes some excellent points against the 1937 comparison. The economy's generally a lot healthier and we haven't had years of deflation, for starters. But some measures seem to indicate a weaker expansion — divisia money growth, one measure of the expansion of an economy, is still relatively weak in the United States: There are reasons that a failure this time would be easier to mitigate against — central banks in 1937 were flying blind then even more than now, with far fewer stimulus tools, and only a few years of experience in fighting a recession without the gold standard. There are also reasons to be concerned. The fiscal surge that accompanied pre-World War II rearmament offered an economic boost of the sort that it's hard to imagine being endorsed today. There is little political will for a similar stimulus — hopefully not for an enormous conflict — today, even before considering how much more heavily indebted the advanced world is. If it all goes wrong for the Fed this time, it can't say history didn't warn it.Join the conversation about this story » NOW WATCH: The 'Uber of helicopters' can get you from Manhattan to JFK for much less than you think
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FRANKFURT (Reuters) - The European Central Bank has received a 3.2 billion euro ($3.58 billion) debt repayment from Greece on Thursday, marking the fulfilment of Athens' last significant obligation towards the ECB for the next 11 months. “The ECB confirms that all Greek government bonds maturing today and owed to the ECB and Eurosystem national central bank have been repaid by Greece,” the bank said. Greece used bailout funds released earlier on Thursday to repay the bonds, held by the ECB and national central banks of euro zone countries. ...
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Greece made a 3.2-billion-euro payment to the European Central Bank (ECB) on Thursday. Reuters cited an anonymous Greek government senior official who was quoted as saying that “the payment was made, the funds are on their way.” The money for this payment came from the first 26 billion euros of the third Greek bailout package that was approved by the
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All Greek banks were needed was another bailout and capital controls. Both needs have been satisfied and now their liquidity has improved. Therefore the Bank of Greece requested the European Central Bank to lower the Emergency Liquidity Assistance (ELA). The European Central Bank lowered on Tuesday the ceiling for emergency […]
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It is nonetheless hugely significant for Greece's future in the euro that its creditors - the International Monetary Fund, the European Central Bank and ...
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Greece's banking stocks have rebounded after a three-day rout that wiped 63% from their market value. The banking index was 17.8% higher with all of its constituent stocks closing with gains. They were led by a 27.4% jump in National Bank, Greece's largest ...
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The economies of advanced nations aren't doing so well. That's what respondents from around the world said when asked by the Pew Research Center if they thought the condition of their national economies was good or bad. A median of 56% of the respondents from advanced nations described their economy as bad, versus 40% who described it as a good. Some advanced countries have become more satisfied with their current economy but are less hopeful that it will improve in the next year — like the UK — while countries such as Israel have become more pessimistic about the economy but more hopeful about its future. Business Insider has put together this feature to help make sense of the numbers. Be sure to check out the CIA World Factbook — from which some economic background was pulled — here and the full Pew Center study here.SEE ALSO: The world's fastest growing economies. Advanced economies. The Pew Research Center surveyed 11 advanced economies, with Germans the most bullish on their local economy and Italians the most downbeat. Spain (+10) has seen the most significant upward shift in positive sentiment about the economy since 2014, while South Korea (-17) saw the most significant downward shift. In 2014, neither Australia nor Canada was polled. Instead, the Pew Center polled Greece. Among the advanced economies, Israelis were the most optimistic about the next 12 months. The French were the least. Israelis were the most optimistic for the future, with close to half saying they expected the economy to improve. France is the most pessimistic for the future, with 42% of respondents saying they expected their economy to worsen. 1. Germany Who said the economy is good: 75% — though that's down 10 percentage points since 2014. Who said it'll improve over 12 months: 25%, down 1 point since 2014. The majority believe the economy will stay the same. What's been going on: The country exited the recession early on in 2009 because of a successful $70 billion euro stimulus package, a rebounding manufacturing sector, and exports. The country's GDP is expected to continue to grow because of low global energy prices, low inflation, and a weak euro. Germany is one of Greece's biggest creditors. Many countries and analysts have advocated for debt relief, but Germany has instead demanded that $70 billion of public Greek funds be put aside in a private trust in Luxembourg and used to pay off debts. (CIA World Factbook) GDP: $3.8 trillion in 2014 with 1.6% growth (World Bank). See the rest of the story at Business Insider NOW WATCH: Scientists are astonished by these Goby fish that can climb 300-foot waterfalls
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By William Schomberg and David MillikenLONDON (Reuters) - The Bank of England appeared in no rush to start raising interest rates on Thursday, with minutes showing just one top policymaker voted to do so this week while the bank forecasts only a slow pick-up in inflation, which sits at zero.Sterling fell to its lowest in nearly two weeks against the dollar, while British government bonds rallied.BoE Governor Mark Carney reiterated that the time for an interest rate hike is drawing closer."However, the exact timing of the first move cannot be predicted in advance; it will be the product of economic developments and prospects. In short, it will be data dependent," Carney said in a news conference.Three weeks ago, Carney said the decision when to hike interest rates would likely come into "sharper relief" around the end of the year. He emphasized on Thursday that this was his own view and that it had not changed since.Most economists taking part in a Reuters poll had expected two or even three members of the Monetary Policy Committee to vote for a rate hike. Markets pushed out their bets on when the BoE would start to raise rates to June next year from May.In the end, only Ian McCafferty wanted to hike rates at the August meeting which ended on Wednesday, resulting in an 8-1 vote in favor of keeping rates at their record low of 0.5 percent, the BoE said.BNP Paribas economist Dominic Bryant said expectations that the BoE could move as soon as this year now looked a stretch, though a move in February was still a possibility.The MPC had previously maintained a united front on rates since January, after a fall in oil prices last year set back the prospects of the first rate rise since 2007.Few economists expect the BoE to tighten policy before the United States Federal Reserve, which is expected to raise rates later this year.The bank said it expected inflation to be back to its 2.0 percent target in two years' time, in line with its previous forecast made in May despite a renewed plunge in oil prices and a strengthening of sterling in the last three months."The most striking development in the UK over the past year has been the fall in CPI inflation, which edged back down to zero percent in June," Carney said at his news conference.The bank said its forecasts were based on bets in financial markets that interest rates would only start to rise in the second quarter of next year. Economists mostly expect a first rate hike in February.The strong pound and low fuel costs would continue to push down inflation until at least the middle of next year, the bank said.Minutes of the bank's monthly meeting showed "some members" saw a risk the inflation could pick up more strongly than the central forecast.But the overall tone of the minutes and the bank's quarterly economic forecasts - which were released together for the first time - suggested the central bank was focused on the potential for the surge in sterling to keep a lid on inflation.Stock market turmoil in China and Greece's unresolved debt problems cast a small shadow on the global economic outlook, the BoE said.The BoE also noted that Britain's weak productivity growth was finally on the rise, which would also help mute inflation even after wages grew surprisingly strongly in recent months.It noted a fall in employment but said it was unclear if this reflected slower demand or an increased difficulty in employers finding qualified workers.The bank raised its forecasts for Britain's overall economic growth this year to 2.8 percent from 2.5 percent in its May forecasts but kept its growth projections for the following years largely unchanged.McCafferty had voted to raise rates in late 2014, along with fellow MPC member Martin Weale. But minority support for a change in policy at the BoE rarely translates rapidly into a shift in the majority's view.Carney said last month that the decision on when to raise interest rates would only come into sharper focus around the turn of the year.(Editing by Hugh Lawson)Join the conversation about this story »
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By William Schomberg and David MillikenLONDON (Reuters) - The Bank of England appeared in no rush to start raising interest rates on Thursday, with minutes showing just one top policymaker voted to do so this week while the bank forecasts only a slow pick-up in inflation, which sits at zero.Sterling fell to its lowest in nearly two weeks against the dollar, while British government bonds rallied.BoE Governor Mark Carney reiterated that the time for an interest rate hike is drawing closer."However, the exact timing of the first move cannot be predicted in advance; it will be the product of economic developments and prospects. In short, it will be data dependent," Carney said in a news conference.Three weeks ago, Carney said the decision when to hike interest rates would likely come into "sharper relief" around the end of the year. He emphasized on Thursday that this was his own view and that it had not changed since.Most economists taking part in a Reuters poll had expected two or even three members of the Monetary Policy Committee to vote for a rate hike. Markets pushed out their bets on when the BoE would start to raise rates to June next year from May.In the end, only Ian McCafferty wanted to hike rates at the August meeting which ended on Wednesday, resulting in an 8-1 vote in favor of keeping rates at their record low of 0.5 percent, the BoE said.BNP Paribas economist Dominic Bryant said expectations that the BoE could move as soon as this year now looked a stretch, though a move in February was still a possibility.The MPC had previously maintained a united front on rates since January, after a fall in oil prices last year set back the prospects of the first rate rise since 2007.Few economists expect the BoE to tighten policy before the United States Federal Reserve, which is expected to raise rates later this year.The bank said it expected inflation to be back to its 2.0 percent target in two years' time, in line with its previous forecast made in May despite a renewed plunge in oil prices and a strengthening of sterling in the last three months."The most striking development in the UK over the past year has been the fall in CPI inflation, which edged back down to zero percent in June," Carney said at his news conference.The bank said its forecasts were based on bets in financial markets that interest rates would only start to rise in the second quarter of next year. Economists mostly expect a first rate hike in February.The strong pound and low fuel costs would continue to push down inflation until at least the middle of next year, the bank said.Minutes of the bank's monthly meeting showed "some members" saw a risk the inflation could pick up more strongly than the central forecast.But the overall tone of the minutes and the bank's quarterly economic forecasts - which were released together for the first time - suggested the central bank was focused on the potential for the surge in sterling to keep a lid on inflation.Stock market turmoil in China and Greece's unresolved debt problems cast a small shadow on the global economic outlook, the BoE said.The BoE also noted that Britain's weak productivity growth was finally on the rise, which would also help mute inflation even after wages grew surprisingly strongly in recent months.It noted a fall in employment but said it was unclear if this reflected slower demand or an increased difficulty in employers finding qualified workers.The bank raised its forecasts for Britain's overall economic growth this year to 2.8 percent from 2.5 percent in its May forecasts but kept its growth projections for the following years largely unchanged.McCafferty had voted to raise rates in late 2014, along with fellow MPC member Martin Weale. But minority support for a change in policy at the BoE rarely translates rapidly into a shift in the majority's view.Carney said last month that the decision on when to raise interest rates would only come into sharper focus around the turn of the year.(Editing by Hugh Lawson)Join the conversation about this story »
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Pound in focus as Bank of England releases rate decision, minutes of policy meeting and inflation report at the same timeSuper Thursday: the Bank of England’s triple data day explainedSuper Thursday: Bank of England transparency or information overload? 8.43am BST We have done a Q&A that helps explain why Super Thursday is important: Super Thursday: the Bank of England’s triple data day explained 8.35am BST Both the US Federal Reserve and the Bank of England are on the cusp of raising interest rates for the first time in almost a decade, and the Fed is widely expected to go first, possibly in September.Another thing to look out for on Super Thursday are the Bank’s famous fan charts on the inflation and GDP growth outlook two years out. Inflation, which has dipped to zero, has been well below the Bank’s 2% target for some time. 8.12am BST As usual, the tone of Carney’s comments at the press conference will be just as important as the voting outcome of the policy meeting. Analysts at Capital Economics say the Bank’s governor may steal the hawks’ limelight on Super Thursday:Although another no-change decision is likely, we expect the minutes to reveal that at least two of the nine Committee members have begun to vote to raise rates. The minutes of July’s meeting showed that a number of members thought that the risk that CPI inflation would overshoot its 2% target in the medium term was growing and suggested that only the Greek crisis was holding them back from switching their votes. Last week’s news that GDP growth sped up from 0.4% in Q1 to 0.7% in Q2 is likely to have reinforced these members’ concerns about the medium-term inflation outlook.We would, however, caution against placing much weight on the minutes until the governor has commented at the subsequent Inflation Report press conference at 12.45 BST. While he is just one member among nine, governors have rarely been outvoted in the past and internal members of the MPC often take their steer from him. And we think that he is likely to sound quite dovish again. 8.03am BST Angus Campbell, senior analyst at UK online broker FxPro, thinks the ‘data dump’ could lead to more volatility for the pound.Today is likely to mark the first steps towards the commencement of the interest rate tightening cycle for the Bank of England. The markets can rest assured there won’t be any rate hike at this meeting and in the past we would not know how the MPC had voted for another two weeks, but going forward those minutes and voting patterns will be released along with the decision. Whilst the premise of this change to the BOE’s procedures may have good intentions, it could lead to greater short term volatility both over the release and after it, before investors have enough time to absorb all the information and get a better understanding of what the BOE’s thinking is. Throw into the mix the Inflation Report and sterling could see considerable volatility. This morning sterling is a little higher against the dollar at $1.5635.Investors continue to expect the U.S. Federal Reserve to raise rates before the Bank of England. (via BBG) pic.twitter.com/qxaiD8DxUJ 7.54am BST Super Thursday: Bank of England transparency or information overload? asks the Guardian’s economics editor Larry Elliott.Instead of the previous drip-feed of information, there is now going to be a data dump... This looks suspiciously like a super-charged version of forward guidance, the big initiative of Mark Carney when he became the Bank’s governor two years ago. Forward guidance proved to be a bit of a dud, not because of the way it was communicated but because of the Bank’s inability to forecast the economy accurately.” 7.46am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Super Thursday has arrived – the day when we get three big releases from the Bank of England that will shed light on its thinking on the state of the economy. For the first time in its 321-year history, the central bank will announce its monthly decision on interest rates, publish the minutes of its policy meeting where the decision was made, and present the quarterly inflation report at the same time.Will governor Carney be as adept at managing market expectations about the potential glide path of rates, as ECB President Mario Draghi has proved to be in his tenure as head of the ECB, or will he live up to his moniker as the “unreliable boyfriend?” Continue reading...
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The European Central Bank decided on Wednesday for the second straight week to keep Emergency Liquidity Assistance to Greece at around 91 billion euros. The decision was expected considering that the Greek government seems to not have made any formal requests for an increase in the ELA. On Tuesday, Bloomberg cited a senior official at the National Bank of Greece
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All eyes are now on services PMIs for the eurozone and the UK 8.23am BST Turning to Greece, a leading think tank in the UK has warned that the new round of austerity measures demanded by its international creditors will mean that the battered economy remains stuck in permanent depression – unless it receives substantial debt relief.The National Institute of Economic and Social Research estimates that a haircut of 55% on Greek debt is needed to give the country a chance of reducing its debt to 120% of GDP by 2020. It warned that continuing to insist on “unrealistic fiscal targets” will ensure that the Greek economy will “remain in depression”. 8.11am BST Sir Charlie Bean, former deputy governor of the Bank of England launches his official review into Britain’s official economic statistics on Wednesday. He told the Financial Times (£) that the “Big Data” revolution on the internet has rendered Britain’s stats out of date. Bean noted that the framework for for the national accounts “was developed in the aftermath of the Great Depression”. As an economy develops, the traditional ways of thinking about it cease to be so relevant,” 8.01am BST The pound is also in focus again, ahead of Super Thursday – the Bank of England’s big day when for the first time it will announce interest rates and release the minutes of its policy meeting at the same time. On top of this, the central bank will release its inflation report with the latest growth and inflation projections. Angus Campbell, senior analyst at FxPro Daily, has looked at the interest rate outlook in the UK and US and the impact on the pound:This wealth of data could overwhelm investors and we are likely to see some volatility following the release, where the market is expecting the first votes for a hike from at least a couple of monetary policy committee members since the hawks were last calling for the base rate to rise last year. What has been made clear by both the Federal Reserve’s Janet Yellen and the BOE’s Mark Carney is that rates are going to move upwards soon. For the BOE the challenge is to determine whether, at a time of very low inflation, wage growth is robust enough to warrant the commencement of rises later this year or early next year, especially at a time when recent data has been indicating the economy is coming off the boil. This week alone has seen unimpressive PMI surveys for the UK and this morning sees the important services PMI release which is expected to dip from 58.5 to 58.0. Anything lower than 58.0 could put sterling under pressure. 7.56am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.We’ve woken up to news that China’s services sector expanded at its fastest pace in 11 months in July, offsetting some of the pressure from a faltering manufacturing industry. Continue reading...
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A note sent out by analysts at Credit Suisse on Tuesday morning takes a look at yesterday's European business surveys, and explains that while Greece had its worst month ever, Italy powered ahead. Here's what CS economists Mirco Bulega and Sonali Punhani say: We kick off this note with the evidence of the lack of contagion from Greece in the rest of the euro area. As shown in the chart below, while the Greek economy took a big hit in July, the Italian economy independently accelerated to spillovers have been limited. And here's the chart they use, showing Greece's astonishing collapse. Note, crucially, that the line representing manufacturing in Italy is heading in the complete opposite direction: That reminded me of someone who, probably more than any other single person, needs thanking for the fact that Greece's latest crisis was isolated, and not a euro crisis 2.0. That person is European Central Bank (ECB) president Mario Draghi. Back in 2010-2012, Greece's problems were Europe's problems — particularly southern Europe's problems. Any sign Greece might be tipped out of the eurozone was taken as a sign that Portugal, Spain or even Italy could be next in line. Draghi has had two major victories (and a series of smaller ones) on monetary policy alone during his time at the head of the ECB, both of which have helped to stop a second euro crisis. The first was Outright Monetary Transactions (OMT), a tool which was never deployed, but the mere announcement of it was a big victory. The ECB essentially said that it could buy bonds on the secondary market (from investors, rather than directly from the government issuing the bonds) if any country was in severe fiscal distress. Some pushed back against Draghi for this — a case against OMT even went to Germany's constitutional court. Thankfully, it didn't succeed. And that's been credited with a large effect — the ECB itself says that the mere announcement reduced Italian and Spanish two-year bond yields by two percentage points, while having no effect on French and German yields (as intended). This time round, when investors asked "if Greece can leave, why not any country," they got an answer — OMT, the ECB and Mario Draghi. While Greek government bond yields rose from below 9% before Syriza's election to above 15% at their recent peak, Portugal's actually fell over the same period. The much-feared domino effect simply doesn't look nearly as scary as it once did. The second major victory was Europe's quantitative easing (QE) scheme. About eight or nine months ago I was gritting my teeth every time Draghi spoke. Eurozone growth was faltering, inflation was sinking further and further, and the head of the central bank seemed to be sitting on his hands. It's difficult to remember that now. There's a bigger-than-expected ECB QE scheme in place (and Draghi insists it's guaranteed until at least September 2016, and with very little vocal opposition inside the ECB). More important perhaps than the actual scheme, Draghi has made what is and isn't in the central bank's toolkit clear — he's clearly expanded the range of responses available to the institution, precisely what Europe needs and will need in the future. It's quite easy to imagine how things could have gone another way — a worse way. Bundesbank president Axel Weber, who resigned over his objections to ECB policy, was once a serious favourite to replace Jean Claude Trichet (Draghi's predecessor). A central bank chief that was more of a pushover, or one who was instinctively opposed to further monetary easing and rescue plans could have made the recent Greek crisis a nightmare far beyond its borders — the fact that didn't happen is down to Draghi more than anyone else.Join the conversation about this story » NOW WATCH: This is how rapper 50 Cent made millions and then lost it
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