The rhetoric was certainly running high ahead of Mario Draghi's announcement of the European Central Bank's latest plans to calm the ructions in the eurozone. Rarely is so arcane a matter as "outright monetary transactions" – the purchase of distressed governments' debt – awaited with such breathless anticipation. Some hailed the ECB President as the potential saviour of the euro, no less.
Given the frighteningly complex fiscal, political and institutional manoeuvres still needed to resolve the eurozone's flaws, such expectation is something of an overstatement. But, Mr Draghi's plans were, when they came, strong stuff nonetheless. In a subtle two-step to negotiate critics' claims that bond-buying overreaches the ECB's mandate (which is to maintain price stability, not prop up ailing state finances), the bank will buy sovereign debt only on the secondary market, and only in conjunction with cash injections from eurozone bailout funds, with all the reform conditions that imposes.
For all the caveats, however, Mr Draghi did not pull his punches: the ECB is ready to make unlimited purchases in order to offset investors' "unfounded fears" that the euro might be allowed to break up. So emphatic a confirmation, with details, of last month's pledge to do "whatever it takes" produced a sharp bounce in markets across Europe.
The significance of yesterday's developments is not confined to the practical. Mr Draghi's programme is also a telling shift in emphasis, away from the more conservative interpretation of the bank's role traditionally favoured by, in particular, Germany. The Bundesbank President, Jens Weidmann, has voiced concerns in recent weeks. But both Jörg Asmussen, a German former deputy finance minister on the ECB's governing council, and also the Chancellor, Angela Merkel, have lent tacit support to the plan – a softening stance with considerable implications.
All well and good. But it would be wise to retain a degree of caution. The history of the euro crisis is littered with lurches from optimism to despair with each new policy initiative. It also remains to be seen how the details will work in practice; whether, for example, the ECB can react quickly enough, and whether the likes of Spain or Italy would be willing or able to accept the conditions imposed.
But even if Mr Draghi's efforts are wholly successful, there is so much more to do. In fact, yesterday's show-stopping plan is only one small step forward. There is still a mountain to climb and the next dangerously precipitous passes must be negotiated within days.
On Monday, officials from Greece's "troika" of lenders will give their verdict on whether Athens' latest €12bn cuts programme is sufficient to secure the next tranche of desperately needed aid. Two days later, German lawmakers will decide whether plans to boost the eurozone bailout fund and move towards closer fiscal union are constitutionally possible. On the same day, a general election in the Netherlands will be, to a large extent, a referendum on, as some see it, eurozone northerners paying for the profligacy of the south. Next month, Spain faces a major refinancing that may yet, for all Madrid's denials, test the ECB's outright monetary transactions programme. There is, clearly, no room for complacency.
While Mr Draghi is no single-handed saviour, he has now done his bit. But he has, at best, only bought Europe's politicians some breathing space. Now they must use it. That means pressing ahead with structural reforms, with proposals for eurozone-wide banking union, with the long-term challenge of closer fiscal, and political, union. The crisis is far from over.Reuse content