As published by the German newspaper Die Welt, chief economist of the European Central Bank Jürgen Stark believes that Spain is a good example of how a country can reduce its risk premium by implementing the right adjustment measures. The Spanish daily Expansión refers to his declarations in Monday’s edition.
“In an interview given to the German paper, Die Welt, the member of the ECB points out that ‘Spain and other countries have demonstrated that interest rates can quickly decrease when one makes an effort.’
“The German expert considers that the euro zone countries must focus on economic reforms rather than expect that the European regulator continues buying the sovereign debt of those countries that are experiencing difficulties. Precisely, one of the main reasons why Stark resigned last September is his opposition to the ECB bond buyback program and the profound discomfort he felt due to the fact that the institution bought sovereign bonds of the most indebted countries of the euro zone, in particular Spain’s and Italy’s.
“In the interview Stark gave to the German newspaper, he explains that the purpose of his resignation was to awaken the German government. ‘They should interpret my resignation within this year’s context,’ notes the economist. ‘Obviously, until today, they have failed to understand how important the principles established in Maastricht such as budget discipline and the coordination of economic policies are for the Monetary Union’ said Stark referring to the euro zone leaders.
“Stark also referred to the role played by the International Monetary Fund, (IMF). According to this German economist, this institution’s funds cannot be used to finance Europe. ‘In practice, I don’t see any country except for the Euro zone ones interested in having access to the IMF funds. It’s an attempt to avoid the prohibition of direct monetary funding in Europe,, he pointed out. The still chief economist of the ECB believes that if the IMF participates in the financing of the euro zone, Europe will be exposed to international agencies. After presenting his resignation in September, Stark will leave the ECB at the end of the year.”