ECB's Stark warns against IMF funds for eurozone

23rd December 2011, Comments 0 comments

The European Central Bank's chief economist Juergen Stark, who is stepping down at the end of the year, warned against using the IMF to bail out debt-mired eurozone countries in an interview Friday.

"It's an attempt to get round the ban on direct monetary financing in Europe," Stark told the daily Die Welt in an interview when asked about a proposal to increase the warchest of the International Monetary Fund so it can shore up euro countries sinking under huge mountains of debt.

"In theory, it does not constitute monetary financing because the money goes into the International Monetary Fund's general account," Stark said.

"But in practice, I don't see any countries other than the euro countries who want to get their hands on the cash."

At a December 9 summit, European leaders called for 200 billion euros ($261 billion) in extra funding for the IMF in the hope the money could be used to help stabilise the euro area.

But in the end, the 17 countries that share the single currency pledged substantially less -- 150 billion euros -- with the balance supposed to be made up by non-euro EU members such as Britain which has been careful not to make a binding commitment.

ECB chief Mario Draghi has also been lukewarm about the idea of involving the IMF.

Stark said that by turning to the IMF, Europe would be placing its fate in the hands of "international committees and the various interests that are represented there.

"Europe must solve its problems on its own and reduce its dependence on the international capital markets by way of rigorous fiscal policies," Stark said.

In a shock announcement in September, Stark, 63, said he would step down at the end of the year, well ahead of the agreed term of his contract in May 2014.

His resignation is widely seen by analysts and ECB watchers as a consequence of his vocal opposition to the central bank's controversial decision to help bail out debt-wracked eurozone countries by buying up their sovereign bonds.

© 2011 AFP

0 Comments To This Article