ECB Chief Is Wielding Even More Sway Than Bernanke

BERNARD CONDON

WASHINGTON (AP) ⿿ Move over, Ben Bernanke. This is Mario Draghi's moment.

The European Central Bank president is overtaking the Federal Reserve chairman ⿿ at least for now ⿿ as the central banker with the most influence on the global economy and markets. Faced with a growing recession and a possible breakup of the 17-country euro alliance, Draghi has bigger problems than Bernanke, who's overseeing an economy in recovery.

As head of the ECB, which meets Thursday, Draghi also has more ammunition left than Bernanke does.

The Fed chief still wields considerable power to drive financial markets. That was clear last week, when stocks jumped after Bernanke signaled in a speech in Jackson Hole, Wyo., that the Fed will do more to help the still-weak U.S. economy.

Yet the focus of the global financial world has shifted to Draghi. Some economists expect the ECB to cut its benchmark interest rate Thursday. Many also hope Draghi spells out plans by the ECB to start buying bonds of troubled European governments to ease their borrowing costs and shore up the euro alliance.

"Draghi's role in averting an implosion of the eurozone puts him in the unfortunate position of being the central banker with the greatest influence on global financial stability in the short term," says Eswar Prasad, professor of trade policy at Cornell University.

Bernanke's task isn't as urgent, "since the U.S. economy is plodding along and does not face an imminent disaster scenario."

Stock prices have risen in recent weeks, in part because investors expect the Fed and the ECB to reduce lending costs in the United States and Europe. The Standard & Poor's 500 stock index has risen more than 5 percent since July 25.

Greece, struggling with debts and its fifth year in recession, may have to stop using Europe's single currency if it doesn't impose the tough budget cuts being demanded as a condition for its bailout. Many fear that bigger indebted countries ⿿ like Spain and Italy ⿿ would be forced to follow Greece out of the eurozone.

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