ECB official: I quit over the bond buying

Julian Harris
Follow Julian
THE EUROPEAN Central Bank (ECB) should not be expected clean up the mess created by individual Eurozone governments, according to its outgoing German official Juergen Stark.

Senior decision-maker Stark steps down at the end of the year. In the autumn he attributed his high-profile resignation to “personal reasons” yet has now confirmed his opposition to the ECB’s controversial bond-buying scheme – widely assumed to be the true cause of Stark’s departure.

“Don't ask too much of the central bank,” Stark (right) told the German magazine WirtschaftsWoche. Up to last week the ECB had splashed €207.5bn (£174.4bn) buying up government debt, with Stark admitting that this is the broad theme responsible for his complaints.

Stark said that limits on the central bank monetising member states’ debts were embedded in the foundation of the European currency union, and called on governments in troubled sovereigns such as Italy to deliver credible plans for fiscal consolidation.

The widely-regarded German economist hit out at calls for the ECB to use a “big bazooka” to try to ease the debt crisis – a term coined last month by British Prime Minister David Cameron. Advocates of such a plan fail to understand European monetary union, Stark said.

Over the weekend, meanwhile, the rating agency Fitch issued a downbeat warning over the Eurozone’s prospects, stating: “a ‘comprehensive solution’ to the Eurozone crisis is technically and politically beyond reach.”