FRANKFURT — European Central Bank president Mario Draghi gets another chance Thursday to spell out how the bank intends to thwart financial disaster in 17 countries that use the euro.
Expectations have been high since late July, when the ECB head vowed to do “whatever it takes” to hold the eurozone together.
Until then, countries such as Spain and Italy had seen their borrowing costs — reflected in the interest rates on bonds they sell — rise to unmanageable levels. Investors were worried the two countries could be pushed into asking for a bailout.
That has already happened three times in the eurozone — with Greece, Ireland and Portugal. The worry is that Spain and Italy are too big to bail out.
If those countries fail to pay their debts on time, a financial crisis could spark that could see the eurozone break up, spreading turmoil across the global economy.
Analysts say Draghi’s comments Thursday could be constrained by the fact that the ECB may not have worked out every detail of its plans. The ECB chief has to strike a delicate balance: Promise and reveal enough to keep markets happy, while making clear that further aid will come only if Europe’s politicians agree to do more.
Draghi has said the ECB will target short-term bonds with maturities of up to three years — the bank can drive up the prices for a country’s bonds. That brings down their interest rate, or yield, and makes it less expensive for countries to borrow money.
