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Foreign Exchange

Draghi: Lost in translation

First, Mario Draghi cancels a trip to the Federal Reserve’s summer shindig at Jackson Hole and now he pens a letter to the German electorate to convince them of the need to support the euro project.

It seems the president of the European Central Bank (ECB) is trying to live up to his pledge to do whatever it takes to ensure the survival of the single currency. Draghi’s absence from Jackson Hole due to a “heavy workload” was widely interpreted as a bid to find time to hammer out a deal on his plans for a European bond-buying plan ahead of next week’s ECB policy meeting.

Meanwhile, his opinion piece on Wednesday in Germany’s Die Zeit, highlights his views on how stability in the euro can be achieved, not necessarily by following extreme choices but by fiscal and economic integration developing in parallel.

Markets certainly have enjoyed the Draghi put, while the euro has performed strongly since the ECB president declared his commitment to the single currency last month.

Indeed, some believe Draghi is not getting the credit he deserves from his article in Die Zeit, with the English-language translation not making a reference to the integration of citizens into the discussion over the future of the euro.

The original German version includes a call “to expand the democratic participation and to include citizens more effectively in the process [of political integration]”, while the English version only refers to seeking ways to “better anchor European processes at the national level”.

That might sound like semantics to some, but others say it goes to the core of one of the deficiencies of eurozone policymakers: namely the lack of communication of policy to their citizens.

Axel Merk, a euro bull who thinks the market has not yet fully appreciated the potential impact of Draghi’s plans to force greater integration in the eurozone, says the president’s article addresses the communication issue head on by talking directly to the German public. He believes that could encourage the region’s politicians to better communicate their views on the future of the currency bloc.

Merk says Europe’s politicians bicker with their colleagues but don’t take time to communicate with their constituents over Europe’s future. That, he says, is a key reason why Europeans cannot relate to European institutions.

“It now takes Draghi to not only impose an integration process on Europe, but also to communicate it to the public,” says Merk.

“Kudos on Draghi. Shame on other politicians for not living up to the task.”

It would appear that “super” Mario has struck again.

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