Jürgen Stark, the European Central Bank executive board member, was closely involved in drawing up the European Union’s fiscal rules when he worked in the 1990s at the German finance ministry. In the past year, he has seen how ineffective they proved - largely, he believes, because of the example Germany set in 2005 demanding their loosening after flagrantly breaching them itself (by which time Mr Stark had become a central banker). Now, he is lobbying actively for a revised, tougher rule book.
Earlier this week, Mr Stark told a Frankfurt conference that proposals put forward by the European Commission “are not the quantum leap that is needed”. Speaking in Vienna today, Mr Stark backed a series of changes along the lines set out by the ECB in their recent paper on eurozone governance. As I have written, these focus on imposing sanctions earlier and with more “automaticity”. (Is there such a word in English?) To me, it seemed Mr Stark had been actively involved in compiling the ECB’s recommendations.
Jürgen Stark has warned of a “full-blown sovereign debt crisis” unless governments take ambitious steps to bring public finances under control, saying the UK, US and Japan face even greater challenges than the eurozone.
His comments were sparked by the escalating crisis over Greece’s public debt, but he played down the idea of the ECB offering Greece a lifeline in an extreme scenario by buying its government bonds. This was not an issued being “discussed at present,” he told journalists.
European countries looking to join the eurozone face tougher scrutiny as a result of the crisis over Greece’s public finances. This is one of the strongest lines from an interview Jürgen Stark, European Central Bank executive board member, has given to Germany’s Spiegel magazine (here’s the English version). “When accepting new members into the euro zone, we have to pay closer attention when it comes to the dates and sustainability of the convergence,” Mr Stark said.
His comments will add to jitters in Estonia, which hopes to join the eurozone next year. On paper, the Estonia is likely to meet the entry criteria, but the worry is that it might yet be excluded on the grounds that its economy has not sufficiently aligned with those already in.
How the ECB is revamping its “monetary pillar”… but why M1 is not behaving as it should, writes Ralph Atkins of the Financial Times