Mario Draghi takes centre stage at ECB

Mario Draghi takes the helm of the European Central Bank (ECB) at the most difficult period in its 13-year history.

With a number of eurozone economies straining under the weight of massive government debt levels, some observers have even suggested the very future of the euro is at stake.

Much will depend on the 63-year old Italian central banker.

"Super Mario", as he is known, is well respected and widely recognised as the best person to head the ECB.

He certainly has impeccable credentials. A graduate of the University of Rome, he holds a PhD in economics from the Massachusetts Institute of Technology and served as professor of economics at the University of Florence between 1981 to 1991.

But Mr Draghi is no dry academic. He went on to become managing director and vice-chairman of Goldman Sachs International, giving him a vital insight into how financial markets work in practice.

He has also worked as an executive director of the World Bank, director general of the Italian Treasury and, perhaps most importantly in the eyes of investors, head of the Financial Stability Board.

Finally, he was appointed governor of the Bank of Italy in December 2005, since when he has gained plaudits for his role in the Italian economy's relatively strong performance in recent years.

Mr Draghi will need all his experience and knowledge to steer the eurozone out of its current crisis.

He is unlikely to instigate any significant policy changes, analysts say.

Like his predecessor Jean-Claude Trichet, "he is relatively hawkish in terms of inflation," says Jonathan Loynes, chief European economist at Capital Economics.

But the ECB is no longer concerned solely with managing inflation, but also with crisis management, as first Greece, then the Irish Republic and finally Portugal found investors unwilling to lend them money.

Here again, Mr Draghi is unlikely to stray too far from the bank's established policy.

"The ECB has taken a relatively hard line on opposing debt restructuring and advocating austerity measures. There is no indication that Mr Draghi will take a different line," says Mr Loynes.

And here lies the great challenge for Mr Draghi, for the ECB's position is rather more hardline than that of Germany.

"The two most powerful institutions in the eurozone are the Berlin government and the ECB," says Jan Randolph, head of sovereign risk at IHS Global Insight.

"If these two don't get on, there can be no solution [to the debt crisis]."

Germany may have softened its stance in recent days, particularly on its insistence that private investors take some of the pain from any debt default by Greece, but divisions remain.

Here again, Mr Draghi seems ideally suited for the job. For a start, his candidacy to head up the ECB was supported by German Chancellor Angela Merkel.

The fact Mr Draghi is Italian is also beneficial, as it helps to "bridge the North-South divide" within the eurozone, according to Mr Randolph.

Perhaps most importantly, he also possesses the necessary political acumen to balance the competing interests of the 17 governments that make up the eurozone, Mr Randolph says.

These particular skills could be crucial when it comes to Greece's seemingly inevitable default on its debts, whatever form that may take.

"No-one is fully aware of the consequences of managing a debt default," says Mr Randolph.

"What matters is the plans put in place to prepare for an orderly default. The challenge is to convey to markets and policymakers the compromises agreed at ECB board level.

"Trichet could do it and Draghi can do it. He has the market credibility."

With so much riding on the outcome of the euro debt crisis, it would certainly appear at least that the ECB has got the right man for the job.