Mr Draghi has won high praise from monetarists around the world, convinced that he has acted just in time to head off a dangerous contraction of the money supply and a full-blown banking disaster. “Draghi has been very astute, and has given the single currency project another lease of life,” said Professor Tim Congdon from International Monetary Research.
“It helps enormously that banks have time to recover. Cheap loans will boost M3 money growth and drive a wider economic recovery this year. Needless to say, the Draghi Bazooka doesn’t solve the external imbalances in the Club Med countries. They will still have to go through internal devaluations, and the question is whether they can endure the agony,” he said.
“Draghi may have saved the euro,” said Lars Christensen from Danske Bank. “What they have done is not optimal. They are acting arbitrarily with no fixed rules and no transparent exit strategy but at least they are acting. If the ECB had done this a year ago, we wouldn’t have had the latest crisis in southern Europe and they would have saved European taxpayers billions.”