FRANKFURT (MNI) – ECB chief economist Juergen Stark, who tendered
his resignation earlier today, warned that massive public fiscal risks
were undermining financial stability.
“At a European level there is a need to strengthen the rules to
achieve economic and monetary union,” Stark wrote in a column for the
German daily Handelsblatt to be published on Monday.
“A far-reaching reform of the decision and sanction mechanisms is
required to continue and ensure the effective coordination of fiscal and
economic policies in the euro countries,” he argued. “It is my view,
that it is indispensable, to a greater extent than previously foreseen,
to transfer powers from the national budget to the European level.”
“Fiscal stimulus would only further increase debt levels and
therefore increase risks even further,” he said, adding that “adjustment
costs would rise significantly in the future.”
Stark also argued in favour of member states adopting sound fiscal
policies which he said would provide a strong boost to confidence.
Stark, who is viewed as a monetary-policy hawk, reiterated his
opposition to the ECB’s bond-buying programme, Handelsblatt said.
Stark said Friday he would quit the ECB’s six-man Executive Board
for “personal reasons”, without giving further details.
–Frankfurt bureau +49 69 72 01 42; e-mail: frankfurt@marketnews.com–
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