FRANKFURT (MNI) – A Greek sovereign default or an exit from the
Eurozone would be more costly for European taxpayers than politicians
think, European Central Bank Executive Board member Juergen Stark said
Thursday in an interview with Latvian publication IR.
“The ECB has warned time and again against the involvement of the
private sector. It is similar to the discussion about expelling a
country,” Stark said
“We know that private sector involvement is more costly for the
European taxpayer than the politicians think. And an exit by one country
will also be extremely costly for the taxpayers,” the ECB’s chief
economist said.
Stark’s comments follow reports that Germany no longer
categorically rules out the risk of a credit default in negotiations
with private banks.
The central bank warned in its last Monthly Bulletin that
substantial private sector contributions triggering a default could
quickly impair other Eurozone member states’ market access and spark
mutually reenforcing sovereign debt and banking sector crises.
Stark reiterated previous comments that the ECB may have reached
its limits in fighting the crisis and that government action is now
required.
“It is not up to the ECB to bail out countries. This is not
feasible. It is legally not possible and it only would create moral
hazard. This is something which governments would have to consider but
not the central bank,” Stark said.
“The only promising way forward is consolidation,” Stark said,
noting that the current crisis is not only a “crisis of the euro area”
but “a crisis of sovereign debt of most advanced economies.”
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–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com
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