European Central Bank President Mario Draghi, embracing policies dismissed by his predecessor, is forcing euro bears to capitulate.

Since July 26, when Draghi said he would do "whatever it takes" to save the 17-nation euro, the currency has appreciated versus each of its 16 major counterparts tracked by Bloomberg. The cost to protect against a default on government debt in western Europe tumbled to a 15-month low and confidence in the region's banking system is improving, with bank stocks rallying 33 percent since June 1, exceeding the 18 percent gain in the Stoxx Europe 600 Index.

While former ECB President Jean-Claude Trichet kept the central bank from propping up debt-laden governments by limiting purchases of their securities as the almost three-year crisis deepened, Draghi has done the opposite since he took over in November. His decisions are placing everyone from former International Monetary Fund Chief Economist Kenneth Rogoff to fund manager Axel Merk on the wrong side of the market.