ECB figures press politicians on economic reforms

25th May 2011, Comments 0 comments

Senior European Central Bank figures pressed European politicians that share the euro Wednesday for tough economic reforms and warned that time was running out to fix their debt problems.

"For a long time the single currency concealed diversities in the starting points and in the economic policies of the various members, as well as the absence of truly binding common rules," Italian central bank chief Mario Draghi told German businessmen in Berlin.

Imbalances between powerhouses like France and Germany, and vulnerable countries like Greece, Ireland and Portugal have generated a lack of trust on financial markets that now expect Athens to default on its sovereign debt.

"The primary responsibility for a response to a lack of confidence must be national," said Draghi, who is expected to be the next ECB president when Jean-Claude Trichet steps down in October.

ECB chief economist Juergen Stark, who also spoke to the group of business leaders close to conservative German Chancellor Angela Merkel, added that there was little time for the necessary political reforms.

Stark stressed that the ECB's easing of monetary policy during the global financial and economic crises could not last forever, and urged governments to resist trying to fund growth through greater debt.

"Necessary structural reforms should not be delayed by expansive fiscal and monetary policies," he said.

The ECB is at loggerheads with EU political leaders over how to resolve a debt crisis that analysts fear could spread from Greece to much bigger eurozone countries like Italy and Spain.

Stark said that indiscriminate use of financial safety nets was "more than questionable."

© 2011 AFP

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