ECB can't solve crisis on its own: Stark
The European Central Bank's role in the current debt crisis must not be reduced simply to that of firefighter and it cannot solve Europe's problems on its own, a top ECB official said Thursday.
"The ECB cannot solve the crisis on its own," the central bank's outgoing chief economist Juergen Stark said in an interview with the online portal VDI Nachrichten.
"The ECB's role can't and mustn't be reduced to that of crisis manager," Stark said.
"It's core function is to guarantee price stability, something which people tend to forget in the current situation. And we've fulfilled that function, despite all the price shocks we've experienced since 1999," he said.
The ECB acted quickly when tensions emerged on the money markets and when Lehman Brothers collapsed in 2008, taking measures "that were not always according to the textbook. We ventured into unchartered territory."
But the guardian of the euro would not be able to fulfill expectations of governments to do even more, Stark continued.
"We'd not only ruin our reputation, but we'd overburden the central bank and jeopardise its independence," he said.
"It is the exploding debt which is the problem. If a central bank moves in the direction of fiscal policy, governments will be seduced to believing that the central bank will solve their problems."
Stark, who is quitting the ECB at the end of the year, hit back at criticism from the United States and the G20 countries over Europe's handling of the crisis.
"People can only give advice if they've got their own house in order. And that can't be said of the US," Stark said.
"I don't think the recommendations made by the US president and the US finance minister are particularly helpful. They're simply distracting attention away from their own problems. Europe's economic fundamentals are more solid that those of the US," Stark said.
© 2011 AFP