Who Is Mario Draghi and Why Is He Important to Economics?

Mario Draghi is an economist, banker, and professor who helped bring economic reform to some of Italy's largest corporate and financial institutions before becoming the country's prime minister in 2021.

Early Life and Education

Born on Sept. 3, 1947, Draghi was raised in Rome, where he studied under the Jesuits. He completed his undergraduate degree at the University of Rome, then moved to the U.S, where he studied economics at the Massachusetts Institute of Technology (MIT). In 1976, Draghi received a doctorate from MIT.

Draghi followed in the footsteps of his father, who was also a banker, after completing his education. In addition to working in the academic world, he spent the majority of his career heading up numerous global financial and economic organizations.

Notable Accomplishments

Early Career

Draghi spent the early part of his career in academia and banking. Between 1981 and 1991, Draghi taught economics at the University of Florence. He also served as an executive director at the World Bank in Washington, D.C. during his tenure at the university.

During the ten-year period between 1991 and 2001, he was general director of the Italian Treasury. As part of his work, he headed the committee that revised and renovated Italy's corporate and financial legislation.

His experience as a board member for a number of Italian banks and corporations, including Banca Nazionale del Lavoro and Istituto per la Ricostruzione Industriale, was crucial at this time. This was especially important for Italy's bid to take part in the European Economic and Monetary Union (EMU) in 1999.

Goldman Sachs and Bank of Italy

Draghi moved into investment banking in 2002. That's when he joined Goldman Sachs' international arm as vice-chair and managing director. Draghi was also a member of the company's management committee. In this capacity, he developed the company's strategy in the European market and worked closely with both large European corporations and European governments. He served in these roles until he left the bank in 2005.

Following his stint at Goldman Sachs, Draghi returned to government banking. He was appointed governor of Banca d'Italia or the Bank of Italy, the country's central bank in late 2005. A few months later, he was elected to the position of chair of the Financial Stability Forum. Renamed the Financial Stability Board in 2009, the organization was responsible for bringing together central banks and governments to investigate and promote global financial stability.

Draghi spent six years leading the bank's monetary and fiscal policy. He also represented the country at the governing council of the European Central Bank (ECB), the eurozone's central banking body. It is a crucial component of the European Union (EU) and comprises the central banks of all EU member states.

Draghi used his time to promote growth in the EU through negative interest rates and quantitative easing (QE). He also worked closely with the ECB's then-president Jean-Claude Trichet to develop economic policy recommendations for the Italian government.

Draghi served as governor of the Bank of Italy until late 2011.

European Central Bank

Because of their close collaboration, Mario Draghi was frequently mentioned as Trichet's successor when his term ended as head of the ECB in late 2011. In May 2011, the Council of the EU adopted a recommendation to nominate Draghi for the presidency of the ECB.

The European Parliament and the ECB itself approved the nomination, confirming his appointment in June 2011. Draghi also served as a member of the bank's executive board, the governing council, and the general council. Draghi also chaired the European Systemic Risk Board.

He had a similar, non-renewable eight-year term and was president of the ECB through Oct. 31, 2019. As president of the ECB, Draghi played a major role in a number of significant economic developments.

Shortly after assuming office, he oversaw a $640 billion, three-year loan program from the ECB to European banks in December 2010. He was also closely involved with Greek debt restructuring following the country's financial fallout. In February of 2012, Draghi initiated another round of loans from the ECB to European banks.

A portion of his activity as head of the ECB was to advocate for the continuation of the eurozone. In 2015, he suggested EU countries had "not yet reached the stage of a genuine [monetary union]," adding that this would potentially jeopardize the "long-term success of monetary union when faced with an important shock."

The "Whatever It Takes" Speech

On July 26, 2012, Mr. Drahgi gave an important speech at a global investment conference in London. At the time, the euro was in trouble—primarily because of the sovereign debt crisis across the European Union. 

During that speech, he told the audience, in English, that the European Central Bank was willing to do "whatever it takes" to save the euro.

In later years, the financial industry and the media have often written about how that moment, the "whatever it takes" speech and the confidence it projected to the world, was a major factor in the euro's subsequent turnaround. 

Draghi was an outspoken proponent of improved economic performance for eurozone countries. But he came under fire in his position with the ECB, largely because of his ties with Goldman Sachs and because of his membership in the so-called Group of Thirty, a private group of financial lobbyists.

His term as chief of the ECB ended in 2019. He was replaced by Christine Lagarde.

Prime Minister of Italy

Draghi retired to private life after leaving the ECB but came back into the public sphere after Italy's president, Sergio Mattarella, requested that he form an administration.

Mattarella's appointment came after the collapse of the government due to its handling of the COVID-19 pandemic. Draghi won a confidence vote in Italy's lower house of parliament, giving his government the authority it needed to take power. Draghi was sworn in on Feb. 13, 2021.

Draghi was popular during his first year in power, but by July 2022, had lost favor with certain members of the coalition government, regarding proposals to provide economic stimulus to counter the energy crisis and Italy's cost-of-living crisis. Draghi initially announced his resignation as prime minister on July 14, 2022, but it was rejected by President Mattarella. With more members of the coalition government withdrawing support, Draghi resigned again a week later, and on July 21, 2022, his resignation was. accepted. Draghi stayed in office as caretaker prime minister. He was succeeded by Giorgia Meloni on Oct. 22, 2022.

The Bottom Line

Mario Draghi is an economist, academic, and banker who rose to become governor of the Bank of Italy, president of the European Central Bank, and in 2021, Prime Minister of Italy.