A brief history of the ECB in 25 moments

FRANKFURT ̵1; The European Central Bank is turning 25. Its been a wild ride. POLITICO looks back at 25 of the most exciting moments from the past year.

1998: Bright New Dawn

The ECB is established, with EU leaders signing off on the make-up of its first Board and Governing Council. The moment goes awry as a newswire spellchecker – for a few glorious minutes until an editor notices – turns Tommaso Padoa-Schioppa, Sirocco Hamlinen and Klaus Leibscher to Thomas Pad-Stopper, Sirocco Hamlinen and Klaus, respectively. turns into a lobster.

2000: ‘Dim Vim’

The ECB’s first president, Wim Duesenberg, learns the realities of communication the hard way: the euro plunges to an all-time low below 85c to the US dollar, as he rules out non-intervention to support it .

Wim Duesenberg EP

2001: Trojan Horse

Greece joined the euro on 1 January, marking the first expansion of a currency union that has since grown to 20 member states. Greece’s accession is a triumph of politics and Euro-symbolism over economics and would lead to a massive crisis for the single currency’s viability a decade later.


Illustration by Ellen Boonen for Politico

2002: In Your Pocket

On New Year’s Eve 2002, people across Europe queued for the first euro banknotes. Among them is Christine Lagarde, along with friends who doubt the biggest cash changeover in history will go smoothly. “We made a bet: “If the machine would give us French francs instead of euro notes, they could keep the money,” the ECB president recalled today. It did not happen. Lagarde keeps her €€€s.


Michelle Porro/Getty Images


Sean Gallup/Getty Images

2003: JCT

Jean-Claude Trichet moved to Frankfurt as part of a backroom deal, whereby Duesenberg quit after only four years. With compatriot Christine Lagarde. Trichet has had to overcome legal problems in France after being cleared of false accounting charges stemming from the Crédit Lyonnais flirtation in the early 1990s.


Pascal Le Segretain/Getty Images

2007: GFC begins—in the Eurozone

The ECB injected €95 billion into money markets in an emergency operation after BNP Paribas froze access to three funds linked to subprime US mortgage bonds. The global financial crisis has begun, but it will take more than a year to reach its climax.

2008: Constriction in the Holocaust

ECB raises interest rates on the eve of the biggest financial crisis in memory. Trichet & Co are concerned about rising oil prices rather than the collapse of the US financial system, before joining a global campaign to cut rates in October following the demise of Lehman Brothers. It made a similar policy mistake when the ECB raised interest rates in April 2011, ignoring alarm bells from the periphery of the eurozone. The double U-turn leaves a permanent mark on the credibility of the ECB.


Illustration by Ellen Boonen for Politico

2009: sovereign debt crisis

As the true scale of Greece’s problems emerges, the GFC devolves into a sovereign debt crisis. Bailout requests come from Ireland, Portugal, Spain and Cyprus, threatening the survival of the euro. The austerity measures imposed by the so-called troika of the European Commission, the ECB and the International Monetary Fund lead to massive social upheaval.


Dimitar Dilkoff/AFP via Getty Images


Aris Messinis / AFP via Getty Images


Louisa Gouliamaki / AFP via Getty Images

2010: Proto-Qi

The ECB announced its first government bond-buying programme, allowing banks to dump their euro sovereign bonds rather than risk losing billions on debt restructuring. Under the Securities Markets Programme, the ECB spends approximately €214 billion on bonds – known derisively as “PIIGs” – of Portugal, Italy, Ireland, Greece and Spain. While dwarfed by later programs, the SMP causes widespread resentment, particularly in Germany, where it is seen as rewarding spendthrift governments and negligent bankers.

2010: Irish Stew

In November the ECB implicated Ireland in a bailout. In a secret letter, which was later declassified, the ECB threatened to end emergency funding from the Irish banking system unless Dublin applied for a bailout and agreed to a program of austerity and bank recapitalisation. Would. In August 2011, Italian Prime Minister Silvio Berlusconi received a similar letter. Berlusconi’s refusal would lead to his ouster, and a year later the biggest crisis for the Eurozone.


2011: Rate Hawk Down

Axel Weber, president of the Bundesbank, resigned in protest of the central bank’s unorthodox policies. Jürgen Stark, a member of the German executive board, also resigned later that year as the bond-buying continued. Weber’s demarche has been triggered by signals from Berlin that it will not back him to succeed Trickett in 2012, fearing that his hard-line approach could split the eurozone.


Axel Weber, former president of the Bundesbank | Carsten Cole/Getty Images

2011: Trishette’s Legacy

A visibly moved Trichet receives the Charlemagne Prize for his service to European integration. The European project appears to be in grave danger, with Trichet calling for a bold – if other-worldly – fiscal integration. “Would it be too bold in the economic sphere to envisage a Union Ministry of Finance, with a single market, a single currency and a single central bank?” Twelve years later, that’s still a pipe dream.


Oliver Berg/EPA

2011: Enter Draghi

The head of the Italian central bank moved to Frankfurt with widespread support – albeit for a short time – from across Germany. build newspaper gives him a Prussian spiked helmet to make it clear what kind of attitude he expects from him towards inflation. Draghi immediately cut rates at his first policy meeting, quickly ending a German media love affair. “Mama Mia,” Bild cries later. “For Italians, inflation and life go together like pasta and tomato sauce.” By the end of his tenure, references to “Count Dragula, sucking up our savings” are the norm.

2012: ‘Whatever’

With three words, Draghi secured his place in central bank history: “Within its mandate, the ECB will do whatever it takes to save the euro,” Drew tells London audience Amid fears that Italy would default and the entire Eurozone would blow up. “Believe me, it will be enough.” Investors believe him, and the ECB gets out of the crisis without spending a cent under a new bond-buying program (‘outright monetary transactions’) set up in the face of stiff German resistance.


Mario Draghi | Daniel Rolland/AFP via Getty Images

2012: “Not Everything”

The tussle erupted against the continued evasion on the part of Bundesbank chief Jens Weidmann. Using one of the few German expressions, Draghi told a Berlin audience that “nein zu elim” or “all in nothing” is not a solution and puts the integrity of the currency union at risk. Undaunted, Weidman compares the OMT program to Goethe’s tragedy Faust, where Mephistopheles causes hyperinflation by persuading the Holy Roman Emperor to print paper money.


Mephisto from Goethe’s Faust


2014: One supervillain to rule them all

The ECB takes on the responsibility of overseeing the largest banks in the eurozone. The financial crisis of 2008 exposed the weaknesses of national regulatory systems often captured by local political interests. A centralized supervisory system oversees an expensive recapitalization program, contributing to years of sluggish growth.


Photo illustration by Ellen Boonen | AFP via Getty Images

2014: Negative Rates

As a deflationary spiral looms, drawn ECB makes its first authentic Quantitative easing policy, buying massive amounts of government bonds to lower long-term lending rates for businesses and homeowners. In June, it went a step further and pushed its prime deposit rate below zero for the first time ever.

2015 Frankfurt aflame

The ECB inaugurates its new twin towers on the site of Frankfurt’s former wholesale market. Building costs have risen from an estimated €500 million to €1.3 billion, drawing ire from eurozone finance ministries, who have felt the troika’s wrath for overspending. The new campus is a magnet for protests against taxpayer-funded bank bailouts and forced austerity. Hundreds were arrested and dozens were injured as rioters set police cars and tires on fire.


Strange Anderson / AFP via Getty Images


Simon Hoffman/Getty Images


Daniel Rolland/AFP via Getty Images

confetti girl

The protest moves inside the new building in April. German activist Josephine Witt Pulley jumps on the table and throws confetti at him while chanting. His T-shirt slogan “End ECB dick-tetership” is a pun on the ECB’s policies as well as its malfeasance. Draghi was not harmed, but the security breach is a major embarrassment for the bank.


Daniel Rolland/AFP via Getty Images

2019: Belle Epoque

ECB dick-tetership ends as IMF Managing Director Christine Lagarde succeeds Draghi. The Hermès-clad political rockstar comes with no economic training or direct experience conducting monetary policy, and ventures beyond the topics addressed by his predecessors. She famously exposed the male dominance of her surroundings with a tweet that showed herself surrounded by all-male colleagues. The only other women in the room are in the pictures on the wall.


2020: The shock of the pandemic and the widening gap

The lack of central government shock absorbers revive fears of a eurozone breakup as the pandemic hits. The fears about Lagarde’s ability appear to be correct as she suggests the ECB will not intervene, saying at a press conference that the ECB “is not here to close the spread”. Turmoil ensues in the market, causing the bank and its president to make a hasty retreat.


Illustration by Ellen Boonen for Politico

2020: Kitchen Table

After days of incommunicado, Lagarde shows her strength: From her Frankfurt kitchen table laden with iPads and cakes, Lagarde secures unanimous support of the Governing Council for a massive €750 billion ‘pandemic emergency purchase programme’ . Negotiating compromises, which most policymakers are willing to support, has been a feature of his presidency.

2021: Digital Euro

The ECB begins work on a digital euro, noting that the decline in the use of cash and the growing popularity of cryptocurrencies could threaten the sovereignty and existence of central bank money. The decision to officially launch a digital euro is outstanding, but Lagarde has left little doubt about the bank’s direction: “How central banks navigate the digital age … important for which currencies ultimately rise and fall,” she later notes In 2023.

2021: Strategy Review

The ECB just finished its first strategy review in 20 years, reflecting Lagarde’s firm belief that the ECB must rise to new challenges such as climate change as well as improve communication with the public. While US Federal Reserve Chairman Jerome Powell says he will not be a climate policymaker, the ECB begins formulating policies supporting net-zero goals.

2022: The demon of inflation returns

Inflation hit a record high of 10.7 percent, plunging the eurozone into a cost-of-living crisis and the ECB into another credibility crisis, The Inflation Monster – once confined to a supporting role in an ECB educational video – With top billing, the back is center stage.


Demon of inflation. European Central Bank