Draghi Says U.S. Critics Were Wrong to Think Euro Would Collapse

Bloomberg, (10/10) -- European Central Bank President Mario Draghi said critics of the euro underestimated the region’s political commitment to the single currency.

“Many commentators on this side of the Atlantic looked at the euro area and were convinced it would fail,” Draghi said during a speech at Harvard University today. “They mistook the euro for fixed exchange-rate regime, when in fact it is an irreversible single currency. It is irreversible because it is born out of the commitment of European nations to closer integration.”

After the turmoil that began with Greece’s bailout in 2010, the euro area is emerging from its longest recession and leaders are seeking to build a banking union that will make the region’s financial system more robust. After lending banks more than 1 trillion euros ($1.35 trillion) in two long-term tenders and pledging to buy an unlimited number of bonds of reform-ready states, the ECB’s next step is to become the supervisor of the region’s largest banks starting next year.

“The changes taking place in the euro area are making our monetary union more robust,” Draghi said. “At the European level, we are approaching a balance of competencies which, taken in combination, should provide more effective stabilization.”

“If we look at the U.S., we see that it strengthened its union in different stages, with each stage eventually begetting the next,” said the ECB president, who will take part in the International Monetary Fund’s annual meetings in Washington this week. “In Europe today, we are in some ways undergoing an analogous process.”