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Can the ECB chief lead eurozone out of crisis?

By Kevin Voigt, CNN
July 31, 2012 -- Updated 0548 GMT (1348 HKT)
  • Investors await Thursday's meeting of the European Central Bank for possible action
  • ECB president Mario Draghi pledged "to do whatever it takes" last week, buoying markets
  • Goldman Sachs' JIm O'Neill: "The eurozone is waiting for leadership"
  • Analyst: "It would really be a game changer if his actions met his rhetoric

(CNN) -- European Central Bank President Mario Draghi is talking the talk, but now will he walk the walk?

That is the question on the minds of global investors this week ahead of Thursday's ECB governing council meeting, after Draghi's comments that the ECB is "ready to do whatever it takes" to preserve the euro currency. Market watchers parsed the statement as a hint that the ECB is ready to intervene to bring down borrowing costs for Spain and Italy, the nations next in the firing line of the eurozone debt crisis.

Markets rallied after the announcement, but is the optimism misplaced?

"To be quite honest, I'm doubtful that we'll see any meaningful stimulus, certainly not the extent that the markets seem to be pricing in after Mr. Draghi's comments last week," Michael Hewson, of CMC Markets, told CNN.

"It would really be a game changer if his actions met his rhetoric, I think we are building ourselves up for a little bit of disappointment as we head into the end of the week," Hewson said.

For Jim O'Neill, chairman of Goldman Sachs Asset Management, the comments from Draghi were the "first real bold signs of leadership" to help guide the eurozone out of the debt crisis that has threatened the 17-nation currency union.

"The reaction to Draghi's comments in stock markets around the world is absolutely fascinating," Jim O'Neill told CNN's Richard Quest. "What is missing is confidence around the world amongst private business people.

"The substantive issue at the core of it with this ridiculous mess in the eurozone is waiting for leadership," O'Neill said.

"It's all about leadership -- he is the president of the ECB," O'Neill said. "And even if the Bundesbank (Germany's central bank) objects, it is only one member of the 17 countries -- Mario's got to somewhere say, `I understand, and I didn't think you'd like it, but we're going to do it'."

Part of the void in leadership is the ability to bolster the psychology of investors, O'Neill suggests. "The fact that the equity markets rallied so much Thursday and Friday (after Draghi's comments) -- If I was a policy maker, I would think, "Hmm - it doesn't take that much (to rally markets)'," O'Neill said. "If you want to look at some of the most successful interventions in my 30 years, the ones that are persuasive enough with the statements and a little bit of money usually go longer than the ones where they say a little, then keep coming back doing different things.

"Yes, they've had a big rally -- that's great," O'Neill said. "But they've got to make sure it's for real."

CNN's Richard Quest and Nina dos Santos contributed to this report

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