Paris: Mario Draghi took another great step this week in leading the eurozone, including the reluctant German Bundesbank, into the world of negative interest rates, showing for the second time that he is a central banker with the magic touch.
"Super Mario", as he is called by many analysts, waved his wand to fight off the rising dangers of deflation by cutting the ECB`s three main interest rates so far that one of them means that banks must now pay for the security of parking their cash with the central bank.
In so doing, he has led the European Central Bank into uncharted territory where no leading central bank has ever set foot before.
The policy body of the bank agreed a wave of measures to push more funds through the banking system to stimulate lending, investment and consumption, and indirectly weaken the euro which would help exporters.
Draghi succeeded Frenchman Jean-Claude Trichet, but had already served on the policy committee as governor of the Italian central bank.
Trichet had seen the first financial crisis coming, and had prepared defences. In a landmark event, on August 9, 2007, he launched special measures to prevent a seizure in the eurozone interbank lending market which could have triggered a systemic collapse.
Those tensions then exposed critical budget and economic weaknesses in some eurozone countries which dragged the single currency area into a debt crisis.
Trichet was in the front line of orthodox crisis management for four years.
This culminated in a letter to the Italy then headed by Silvio Berlusconi that laid down reform conditions in return for any help in buying Italian bonds to push down borrowing rates for the government.
Trichet had won breathing space, but the eurozone was still on the verge of another crisis which could tear it apart and dislocate the European Union when Draghi took over one of the most demanding jobs in global finance, in June 2011.
Some commentators were sceptical that an Italian could retain the respect of the German central bank, the Bundesbank, founded on principles of monetary rigour.The German popular newspaper Bild greeted Draghi with with irony, but soon changed its tone portraying him wearing a German iron helmet.
Last month, the German business newspaper Handelsblatt portrayed him in clothes like a Roman emperor, as "Mario Cesar Draghi" in defence of the euro.
Draghi first made his big mark in 2012 about 10 months after taking office.
On July 26, in two short sentences he said that "the ECB is ready to do whatever it takes to preserve the euro," adding a warning to sceptics on the markets, "and believe me, it will be enough."
Then on September 6, he announced that the ECB was making a leap of principle by undertaking to buy bonds already issued by eurozone governments in trouble. This would be a "fully effective backstop", he said. The euro was "irreversible".
Those audacious decisions turned out to work. Tension slowly ebbed away.
Draghi is now widely acclaimed as the man with the magic touch, the magician who risked his wand and saved the euro, although he had the benefit of the work, and cultural changes, already achieved by Trichet.In one sense Draghi, with vast experience as an academic and international banker, fits the image of the sophisticated Italian. Always elegantly dressed, he is said to exercise great charm and to have a clever way with words, although initially markets sometimes misread his more colourful statements.
One of his greatest skills lies in winning people over, and knowing when to stop, people who follow his actions say.
He used "remarkable communication skills" to calm the markets, but knew when he had to act "so as not to lose credibility," analyst Alexander Baradez at IG France finance house in Paris told AFP.
The next great step came on Thursday, just as ceremonies began in Normandy for the 70th anniversary of the D-Day invasion which was to end World War II and result eventually in the creation of the European Union.
Draghi led the policy committee, including the Bundesbank, into the negative rate experiment and other measures to push money into the economy.
This was the ECB`s "D-Day", said Union Bancaire Privee chief economist Patrice Gautry. "The ECB is writing a new page in European monetary history."
Paris School of Economics Professor Agnes Benassy-Quere said that with his actions in 2012, Draghi had "toppled an enormous taboo" for German hardliners.
But the need for the measures shows that the eurozone crisis still hovers, as a shadow of deflation, and if the cash taps pump as intended, at some point the flow must be reversed.
"Praised to the heavens today, Draghi will be discredited tomorrow," forecast Saxo Banque analyst Christopher Dembik.
But at Berenberg Bank, chief economist Holger Schmieding declared: "The systemic crisis is over." Ever since those decisions in 2012, "markets have overcome the irrational panic ... The ECB has delivered more than we expected."
