FRANKFURT (MNI) – The Eurogroup’s attempt to boost the firepower of
the International Monetary Fund as an additional backstop against
contagion from the sovereign debt crisis is intended in practice to
circumvent the ban on central bank financing of governments, and it will
increase dependence on the Fund, ECB Executive Board member Juergen
Stark charged in an interview published Friday.
Theoretically, support from the IMF would not come from the central
bank, Stark told the German daily Die Welt. “But in reality, I see no
other countries than Eurozone members that want access to the money. It
is an attempt to circumvent the rule against public financing from
central banks.”
The IMF has loosened its conditions for aid and risks fighting
structural crises with ever more liquidity, Stark warned. “It is
becoming a global lender of last resort and that worries me.”
Instead, high-debt countries must consolidate their public
finances, Stark reiterated. “Spain and other countries show that
[borrowing] rates fall rapidly when an effort is made.”
Stark confirmed that his decision to step down from the ECB at the
end of the year was motivated by his opposition to the Governing
Council’s strategy of buying sovereign bonds on the secondary market,
but also by governments’ disregard for the fiscal rules of monetary
union.
“I resigned because I saw my personal credibility jeopardized,” he
said.
–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com
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