Changing the guard

Earlier this month Jean-Claude Trichet was joined by heads of state and members of the banking and financial elite for his official send-off at the Alte Oper concert hall in Frankfurt, Germany.

As the first European Central Bank president to serve out the full eight years of his term in office, Trichet has been through a lot.

At his farewell ceremony, he recalled the first four years as a time in which the three largest governments tried to weaken the European Union's Stability and Growth Pact, and then talked about the more recent financial and debt crises.

In his parting speech Trichet said the global financial meltdown was the first time since World War II that developed economies had been the epicenter of a global crisis.

Praise and criticism

That crisis characterized the latter part of his tenure, somewhat overshadowing his efforts to stabilize the common currency.

But he never lost sight of that goal himself, and remains convinced that stable monetary value is particularly important for the poorest and weakest member states.

While he has drawn widespread appreciation for his profoundly European stance and monetary policies, the ECB decision to buy state bonds from Greece and other debt-ridden eurozone countries has met with skepticism, particularly in Germany.

Independence on the line

Critics say the move strips the ECB of its independence. But Michael Heise, chief economist with German insurance giant Allianz, says the sales could have been managed in a better way, but the idea should not be ruled out on principle.

"Ultimately the ECB is the most effective line of defense available to us in fighting the crisis," Heise told Deutsche Welle. "Just letting the it run its course would not be an acceptable strategy, and it would hit Germany with monumental force."

Trichet's successor, Bank of Italy governor Mario Draghi is well aware of the strength of an independent central bank. But he has a lot to do to prove he deserves his nickname "Super Mario."

Draghi has said in the past that he has a reputation for not being afraid of impossible challenges, which will stand him in good stead at the ECB. As an Italian his first task is going to be to prove that the euro is as important to him as it was to his French predecessor.

The jury is out

Jörg Krämer, chief economist at Commerzbank is not convinced that the new president will be able to pull this off.

"During the application process, Draghi tried to sell himself as the fighter of inflation," Krämer told Deutsche Welle. "He wanted to dispel any idea that as an Italian he would take a more relaxed approach."

But Heise says the new president is unlikely to make the purchase of state bonds a regular instrument of the ECB, not least because as governor of the Bank of Italy, he wouldn't want to be labeled as the one who had rolled out that program.

"He will try to reduce it and he will try and put pressure on his own government and on other European politicians in Brussels to speed up reforms," Heise concluded.

Author: Brigitte Scholtes / tkw
Editor: Ben Knight