ECB's 'Whatever it takes' speech saved the euro; Italy avoided over EUR 100 billion costs

Frankfurt – Three words uttered by then-European Central Bank President Mario Draghi in 2012, "whatever it takes," are credited with averting the euro crisis. A new analysis by KfW Research indicates that the ECB's subsequent monetary policy has resulted in substantial savings on borrowing costs for euro area countries.

Italy, in particular, has benefited significantly. The research estimates that Italy alone has avoided over EUR 100 billion in additional funding costs since Draghi's pledge and the ensuing expansionary monetary policy. This financial breathing room should be strategically used for growth-promoting reforms, especially as interest rates are now beginning to rise.

Draghi's speech, delivered at a conference in London on July 26, 2012, signaled a strong commitment to the euro and the euro area during the crisis's most acute phase. Five years later, amidst Brexit and widespread skepticism towards the EU, a "reawakened European spirit" is observed across the continent, reflected in both election results and public sentiment, according to KfW Research.

The looming interest rate turnaround necessitates fiscal consolidation. KfW Research emphasizes that countries like Italy must prepare for increased financing expenses by implementing necessary reforms. Effectively utilizing existing financial leeway for structural improvements that foster sustainable growth is now paramount.