Mario Draghi: The rise of "Mr Somewhere Else"

By Gavin Jones ROME (BestGrowthStock) – Mario Draghi never stops. It’s a measure of both his abilities and his ambition that in the Bank of Italy the boss is known as “Signor Altrove,” or Mr Somewhere Else – a reference to his habit of trying to be in two places at the same time. At international summits, according to one European policymaker, they call him ‘Where’s Mario’ because “whenever you need him he has disappeared somewhere” to talk to some other official or on his cell phone.

When crisis hits, though, the 63-year old central banker and president of the Financial Stability Board knows exactly where to be – and how to act. Draghi was a lynchpin of the Italian Treasury in the early 1990s when Italy was forced out of the European exchange rate mechanism, devalued its currency and faced the real possibility that it would be unable to join the European monetary union.

“When we were on the brink of a debt default in September 1992, I remember saying ‘It feels like we’re falling from a very high skyscraper,'” recalls Francesco Giavazzi, a fellow Italian economics professor, who has often worked with Draghi since they studied together at the Massachusett’s Institute of Technology in the 1970s. “He answered calmly: ‘Well maybe we’ll find a net under us before we hit the ground.’

“He was sure our deficit and debt cutting program would satisfy the markets, and in the end he was right.”

Draghi is now a central part of the global financial safety net. A former economics professor who has taught at Harvard and worked at the World Bank and with investment bank Goldman Sachs, he is tasked with driving financial market regulators to coordinate and prevent banks and other financial institutions from needing taxpayer-funded bailouts, just as Bear Stearns, AIG, Lloyds TSB and a host of other banks did in 2008.

It helps that besides his hyper-active work schedule, the Bank of Italy chief is probably the most respected Italian in international economic and political circles. His experience both in policy-making and financial markets has given him an exceptional capacity to see issues from both sides of the fence — the markets’ view, and the regulators’.

“Draghi is outstanding, he knows what he wants and works the committee to get the results,” says one member of the FSB, speaking – like most colleagues Reuters interviewed for this article – on condition of anonymity. Despite the Italian’s tendency to double-book, he says, Draghi also possesses the “pretty priceless asset of delivering stuff on time.”

SUPER MARIO

As an economics professor, Draghi advised more than one of Italy’s revolving door governments in the early 1980s, before going to Washington for six years as an executive director at the World Bank. On his return in 1990, he worked briefly at the Bank of Italy as advisor to Governor Carlo Azeglio Ciampi before heading back to the Treasury in the key post of director general, a job he kept for 10 years.

In this period he overhauled the Treasury’s internal structures, rewrote Italian takeover rules, and spearheaded one of the largest privatization drive ever undertaken in Europe. He was central to Italy’s bid to join the first wave of euro currency participants, helped draft the Maastricht Treaty which set the ground rules of the new currency, and headed the committee which prepares the agenda for monthly meetings of economy and finance ministers. Such was his frenetic activity at the Treasury that the Italian media dubbed him “SuperMario.”

“Draghi is exceptionally smart, he’s incredibly focused when he makes a commitment and, contrary to his cold public image, he is also very good with people and has a lively sense of humor,” says a central bank colleague. A fluent English speaker, Draghi also wins wide praise among the 60-odd central bankers, Treasury officials and regulators from the 20 countries on the FSB.

Tellingly, a fellow European central banker calls him “very un-Italian.”

“He has the ability to address problems analytically, to look at the problems rather than the people around the problems which many policymakers do not have,” Giavazzi says. “The fact he has both policymaking and market experience is also unusual. There are not many policymakers who have direct experience of how a trading desk works.”

Such qualities could well help Draghi in his bid to follow Jean-Claude Trichet as president of the European Central Bank – a choice that European leaders will make in the middle of next year. He is up against Bundesbank President Axel Weber, who has a far less varied resume and – apart from brief research fellowships – has never worked outside Germany, though he is backed by the euro zone’s most powerful economy and most influential government.

“What would Draghi bring to the ECB presidency? Wide international experience and reputation, full command of the technicalities, negotiating ability and self control,” says Tommaso Padoa-Schioppa, a widely respected former member of the ECB’s executive board.

Even if Draghi doesn’t get the ECB post, his role at the FSB will keep him busy. Besides the politically fraught task of establishing a list of the world’s banks really too big to fail, the FSB has the daunting job of driving unprecedented reforms through an extremely divergent group of countries in the G20.

Mario Draghi: The rise of "Mr Somewhere Else"