THE BLOG
07/26/2013 01:16 pm ET Updated Sep 25, 2013

Europe's Incomplete One-Year Anniversary

I was in the audience exactly a year ago when Mario Draghi, the well-respected president of the European Central Bank (ECB), made his now-famous "whatever it takes" remarks.

Twelve months later, this stands out as the boldest and most successful initiative in the history of modern central banking. Yet the durability of the benefits is undermined by Europe's frustratingly slow progress in getting to grips with its growth and employment deficits.

Europe's economic context was a daunting one that sunny day in London.

The Eurozone's financial system was fragmenting and deposits were fleeing struggling banks. Credit intermediation was coming to a complete stop, starving companies of working capital and putting investment plans on hold. Financial markets were in turmoil, with surging borrowing costs threatening sovereign creditworthiness and eroding liquidity.

In essence, Europe stood on the verge of a great depression, facing an immediate future of serial bankruptcies and massive unemployment.

In a conference organized by the British government, Mr. Draghi took the stage for a panel of central bankers' panel. In addition to those in the room attending the "Global Investment Conference," the event was well covered by the media and simultaneously streamed to nervous world markets.

Mr. Draghi totally upstaged his colleagues on the panel. He directly and frankly addressed the what, how and why of Europe's enormous financial strains. Comparing the Eurozone to a bumble bee that is able to fly despite seemingly-irregular aerodynamic properties, he confidently and calmly re-assured all that were listening that "the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

It was an extremely bold step.

Mr. Draghi courageously placed the ECB front and center in what were (and still are) complicated and stressful political interactions among the 17 member governments of the Eurozone. He seemingly did so without fully consulting with his colleagues on the central bank's governing council. And he put forward ambitious claims without concrete measures to back them as yet. (These came later, culminating in a dramatic ECB announcement in September.)

It also turned out to be an extremely successful step.

Without spending a single Euro, Mr. Draghi calmed markets, reversed the bank deposit flight and allowed the financial system to partially heal. In the process, he managed to unify a governing council that could have easily disintegrated into one big national political mess - thus bringing an important element of coherence to often-erratic cross-border and regional interactions.

Yet I suspect that the one-year celebration will not be an entirely satisfactory one for Mr. Draghi and his ECB colleagues.

While they brilliantly delivered - and did so by literally making it up as they went along - national and regional politicians have lagged. As such, the financial improvement has not been accompanied by a meaningful change in what matters most: namely, the ability to generate economic growth, create jobs and arrest excessive income and wealth inequalities.

Europe's incomplete anniversary speaks to a broader phenomenon that serially frustrates the global economy from recovering fully from the shock of the 2008 global financial crisis: Politicians have failed to exploit the window offered by experimental central bank policies, and continue to do so.

In Europe, national governments still differ on the causes of the region's malaise; and if you cannot agree on history -- or at least put it aside -- it is hard to press forward with a unified and credible vision that gets sufficient buy-in from naturally-skeptical citizens.

In the United States, a polarized Congress has undermined virtually every policy step proposed by the Obama Administration to bring the economy closer to escape velocity for economic growth and job creation; and Capitol Hill has done so regardless of merit and need. As such, the Federal Reserve has felt compelled to venture deeper and deeper into experimental policies, raising concerns about collateral costs and unintended consequences.

In celebrating the one-year anniversary, the West would be well advised to look beyond the great success of a courageous (and extremely cost effective) policy measure.

We should also think in terms of foregone opportunities. And we should constantly remember the millions of unemployed, the alarmingly high joblessness among the young, the struggles that too many face in securing their families wellbeing, and the growing number of retirees that are legitimately worried about their pensions.

They all serve as a vivid reminder of an incomplete success. Hopefully, they will also add to the calls for more comprehensive and durable actions.