FRANKFURT (MNI) – The European Central Bank will be overextended
and no longer able to fulfill its price stability mandate if it engages
in more sovereign bond buys, former ECB Executive Board member Juergen
Stark wrote in an editorial for German daily Handelsblatt Tuesday.
Stark, who resigned from the ECB in 2011, in large part because of
the original SMP bond-buying program, said restarting such a program
would lead to inflation dangers down the road and further erode the
ECB’s political independence.
Stark accused the ECB Governing Council members from southern
peripheral Eurozone countries of trying to use the ECB to achieve
national interests. He said bond buys were “hardly” relevant for
monetary policy and instead amounted to “de facto” state financing.
“The role, which the ECB appears prepared to take on, will
over-extend the central bank and further erode its independence from
politics. And in the end, the central bank will no longer be able to
perform its core task, guaranteeing price stability,” Stark wrote.
“There is a threat of higher inflation – not today, not tomorrow.
but medium to long term,” he wrote.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —
[TOPICS: M$X$$$,M$$EC$,MGX$$$,M$$CR$]
