–Says No Signs Of Second Downturn For Eurozone Economy

BRUSSELS (MNI) – German support for the euro isn’t waning even
though Eurozone’s largest country has to put up the biggest chunk of
loans to support other EMU nations, Jurgen Stark, a member of the
Executive Board of the European Central Bank, said in a radio interview
broadcast on Monday.

“I don’t see waning support from the German government,” Stark —
a German national who is the board member responsible for economics and
monetary analysis — told BBC Radio 4 in an interview.

“The Germans know there is no alternative to the single currency,”
he added.

After the market chaos caused by fears that some countries in the
Eurozone could default on their debts, the 16 Eurozone members and the
International Monetary Fund put together a E110 billion loan package for
Greece and a E750 billion loan facility that other countries could use
in case of emergencies.

Germany — as the Eurozone’s largest economy — has to shoulder the
biggest burden, and that has fuelled anti-euro sentiment across the
country.

“We do not deny that there are problems…but they are less severe
than markets suggest,” Stark said.

He said “there is no basis at all” for rumours that other high debt
and deficit countries in the currency club were set to ask for aid.

“We should not believe in rumours but in facts,” Stark said.
“Markets are extremely nervous.”

He said “there are no signs of a second downturn or a second
potential downturn” for the Eurozone, but reiterated the ECB’s stance
that debt and deficit “consolidation is key.”

More sanctions and budget surveillance are needed, Stark said,
adding that reviewing national budgets at the European level before they
are finalised nationally is an “important element, but only one among
many elements.”

A controversial proposal from the European Commission which
proposes that national budgets and key indicators be seen and peer
reviewed by the EU’s executive arm and the finance ministers from other
EU countries is set to be discussed at a meeting of Heads of State and
Government on Thursday and Friday.

“Monetary union requires a transfer of sovereignty,” Stark said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]