Mario Draghi outraged after US Treasury Secretary listed eurozone flaws ‘one by one’

ECB conference: Mario Draghi discusses policy stance

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The two most powerful former governors in the world, at the helm of the Federal Reserve and the European Central Bank during the Great Recession, received some remarkable promotions in 2021. At the end of January, Janet Yellen was sworn in as the US’s 78th Treasury Secretary and the first woman to hold the office. Just a few weeks later, Mario Draghi became Italy’s new Prime Minister.

Mr Draghi is very popular in the US and has often been considered as the most American among European bankers.

This is partly because of his days as Goldman Sachs’ Vice president, but also because of his strong partnership with Ms Yellen during the global financial crisis.

Many believe their appointments will mean stronger relations between Italy and Washington – but also with the EU as a whole.

The two have not always seen eye to eye, though.

According to new Italian book “L’Artefice” by Jana Randow and Alessandro Speciale, Ms Yellen actually sparked the ire of Mr Draghi at a dinner organised by the Bank for International Settlements (BIS).

Ms Yellen fiercely criticised the eurozone, listing its many flaws, the book claims.

The book reads: “To this day, Yellen openly admits that she was never ‘enthusiastic about the euro’.

“It seems she had been much less diplomatic in the informal conversations between colleagues gathered for dinner in Basel.

“According to two witnesses, she listed the flaws of the single currency one by one.

“Her criticisms, added to those of the BIS, that the anomalous policies of the ECB were sowing the seeds of a future crisis, outraged the future president of the ECB.

“‘Yours is a counterproductive attitude’, he seems to have blurted out, then continuing more or less along this line.

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“‘We are aware of the risks, but the fact remains that the economy today needs a supportive monetary policy.’

“‘It’s too easy to just cry wolf, so you can say, in two or ten years, ‘See? I told you.’

“‘You should be more analytical.'”

Ms Yellen is not the only prominent US figure who has criticised the single currency.

At an event organised by Junior Achievement, a non-profit that teaches children about business, in 2011, American investor Warren Buffett explained why the euro is ultimately doomed to fail.

He said: “That is something I would have not done…in terms of linking 17 countries to a single currency.

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“Just imagine if 10 or 15 years ago I had proposed the US formed the Western hemisphere currency union…We would have taken Canada and that would have probably been okay.

“But then we would have taken Mexico, Peru, Ecuador…And would that sustain itself if they follow different fiscal policies and have different cultures?”

Mr Buffett added: “It [the eurozone] was a great experiment, I am not so sure it’s that workable without either coming closer together or reconfiguring in some major way.”

Mr Buffett is a famed American investor, business tycoon, philanthropist, and the chairman and CEO of Berkshire Hathaway.

He is considered one of the most successful investors in the world and has a net worth of over US$85.6billion (£61bn) as of December 2020, making him the world’s fourth-wealthiest person.

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