ECB's Stark takes swipe at bond-buying programme
European Central Bank chief economist Juergen Stark appeared to hit out once more at the bank's controversial bond-buying programme on Tuesday, saying the crisis was no excuse for the bank to overstep its mandate.
"The intensity of the crisis must not be used as a pretext to throw principles overboard that guarantee the long-term economic stability in the euro area," Stark said in a speech prepared for delivery at a European forum in Lucerne.
A copy of the speech was made available by the ECB in Frankfurt.
"This is true for governments as it is for central banks. Red lines must not be crossed, otherwise what is a solution to today's crisis will lay the basis for a new crisis tomorrow," the economist said.
Stark, 63, did not explicitly mention the ECB's controversial decision to help bail out debt-wracked eurozone countries by buying up their sovereign bonds.
But his shock announcement in September that he is standing down at the end of the year is widely seen by analysts and ECB watchers as a consequence of his vocal opposition to the bond-buying programme.
"Little is to be gained if we blindly act a European level to ease the pressure on the markets in the short-term, but in doing this jeopardise the long-term stability and ultimately the very existence of economic and monetary union," Stark said.
"Or if in misjudging structural problems, we offer excessive liquidity as a solution," he added.
Stark, who is set to be replaced by the current number two at the German finance ministry Joerg Asmussen, insisted the ECB "must not go beyond its mandate."
He said: "Its sole democratic legitimacy is in the safeguarding of price stability and it is solely for this reason that it has been made independent from political influence."
At the same time, Stark defended the ECB's decision to make unlimited liquidity available to eurozone banks in the current crisis.
"Aside from its interest-rate instrument, the ECB has reached to liquidity measures, the extent and modality of which I would have not been able to imagine in the years before the crisis," he said.
"But the measures will fully in accord with our price stability mandate," Stark said.
Nevertheless, the measures were "limited and are only justified for as long as the extraordinary conditions require," he said.
Ultimately, it was up to governments to get to the root of the crisis, Stark insisted.
© 2011 AFP