Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Is outgoing ECB boss Jean-Claude Trichet a saviour or a failure?

Jean-Claude Trichet retires next month – to some his bold plans rescued the eurozone, to others his decision to raise rates twice since the financial crisis have destroyed business confidence

Jean-Claude Trichet, Europe’s central bank boss, is readying himself for what he probably considers a well-earned rest. He retires at the end of next month, leaving him only two more opportunities to make interest rate decisions for the 15 member euro club, the first being Thursday.

Several assessments of his five years in office have already appeared.

Some cast him as the saviour of the currency bloc, with his bold decision to deploy ECB funds to rescue Italy and Spain with massive bond buying sprees. In the face of Bundesbank reluctance and wrangling among senior euro bureaucrats and politicians, he rode to the rescue, armed with all the firepower the ECB could muster.

But to his critics he is leaving a burning ship that he helped construct back in the 1990s out of bits of rope and balsa wood. Nouriel Roubini, an economist credited with predicting the banking crash, has campaigned vociferously against him since the ECB raised rates in the spring. According to Roubini it was probably the worst policy decision of the last six months and destroyed what was left of business confidence in Europe at the time.

Trichet’s rescue of Spain and Italy is a temporary fix in exchange for draconian tax rises and spending cuts that have already brought workers out on the streets.

Trichet’s legacy could be poverty for millions of southern Europeans, trapped in a currency that only benefits rich Germans and the Dutch.

Roubini wants Trichet to reverse his two quarter-point interest rate rises, to ease the supply of money, and buy more bonds from beleaguered banks to help them lend more. But there is no chance of a U-turn.

Trichet has eaten humble pie before, but weeks before his exit? And the prospects of his successor, the Italian central bank boss Mario Draghi, cutting the rate are slim. Draghi has already stated talking tough. To win the election for the top job Draghi was forced to dance for the Germans to prove his loyalty to the cause of sound money. There is every prospect he will not betray his masters when he is finally crowned.

guardian.co.uk © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds