–Adds Comments on Maastricht Treaty
FRANKFURT (MNI) – The introduction of so-called Eurobonds would be
tantamount to making a transfer union out of the Eurozone, European
Central Bank Executive Board member Juergen Stark said in an interview
with the German daily Handelsblatt published Friday.
“Eurobonds are not only the entrance into a transfer union, they
are a transfer union,” Stark said. They are not the magical solution to
the sovereign debt crisis, but rather just mask the symptoms, he said.
“It is a false solution that creates false incentives.”
To allow some member states to shoulder the responsibility for
others’ debts would require a modification of the Maastricht Treaty,
Stark said.
However, like arguments for private sector participation in the
bailout of Greece or for debt rescheduling, they are merely attempts to
escape “easily” from the crisis, he said. “But it cannot happen without
pain.”
Member states should instead check their expenditure structure,
while the introduction of an upper debt limit in their constitutions
would be essential, he urged.
Stark expressed sympathy with those in Germany who are concerned
about the ballooning cost of bailouts.
As for the ECB’s bond-buying program, its duration depends on how
long the financial market tensions persist, he said. But compared to the
bond buys of the U.S. Federal Reserve and the Bank of England, the ECB’s
purchases have been virtually negligible, he affirmed.
It is risky to keep interest rates too low for too long, he warned.
“Such a policy contributes to excess risk-taking and to mistaken
investments and thus undermines the growth potential of an economy.”
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
[TOPICS: MT$$$$,M$$CR$,MGX$$$,M$$EC$,M$G$$$]
