Clement Inbona

Whatever it cakes! *


Christine Lagarde chose to celebrate the 25th anniversary of the European Central Bank (ECB) – surrounded by her predecessors Mario Draghi and Jean-Claude Trichet – with this play on words. A lot has happened at the Frankfurt institution over the last quarter of a century!

As the direct heir of the German central bank, the Bundesbank, the ECB was born on 1 June 1998, initially bringing together 11 founder countries determined to implement not only an economic union, but also a monetary one. Even before its first anniversary, it had established a common currency – the euro. In its infant years, the institution had to face its first financial crisis with the bursting of the dot-com bubble, followed in 2001 by a geopolitical crisis in the wake of the 9/11 attacks. During its second decade, with Jean-Claude Trichet at the helm, the young institution proved its maturity with its response to the 2008 financial crisis, coordinating with its US, UK and Chinese counterparts. The solidarity of its members and its common currency proved a strong defence and guarantee of credibility during this global crisis.

Its adolescence was marked by an existential crisis, when from 2011 onwards the threat of fragmentation emerged, culminating in fears of the default of one of its members, Greece. The eurozone was on the brink of implosion. It was not until July 2012 that Mario Draghi quashed this crisis with three legendary words: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough”. 26 quarters of economic growth followed, and with them a peaceful transition to maturity for the bank. Today, the ECB is widely supported, with close to 80% of citizens supporting the euro, whereas this figure was just 60% at the height of the sovereign debt crisis.

However, the bank’s first years of adulthood have not been an easy ride. Proof of its maturity, the Frankfurt institution has negotiated the Covid crisis and the unfurling inflationary wave with an expanded tool kit and strengthened solidarity. With the accession of Croatia to the eurozone at the start of 2023, 20 countries now belong to the common currency zone.

The ECB was built in times of crisis and is unlikely to be spared further turbulence in the coming quarter century. It is entering this phase during the most brutal monetary tightening cycle of its history, to stem the inflationary wave in the aftermath of the Covid crisis and the war in Ukraine, while economic growth in the zone is shaky. In the longer term, it will have to contend with the challenge of the climate crisis. But as Jean Monnet – one of the founding fathers of Europe – said: “people only accept change when they are faced with necessity, and only recognise necessity when a crisis is upon them”. There will be many more opportunities for the ECB to become stronger, and to consolidate its legitimacy and independence.


Final version of 26 May 2023 – Clément Inbona, Fund Manager


[1] Christine Lagarde and the former Presidents of the ECB shared a cake on the occasion of the ECB’s 25th anniversary: