Money & Banking

European Central Bank’s Chief Economist resigns

PTI Berlin | Updated on November 12, 2017

European Central Bank (ECB) Chief Economist, Mr Juergen Stark, stepped down on Friday, plunging European stock markets into turmoil, while the euro dropped to the lowest level against the US dollar since February.

Mr Stark had repeatedly spoken against ECB’s controversial bond buying programme favoured by its President Mr Jean-Claude Trichet, arguing that it will increase the risk of inflation in the 17-nation euro zone.

He maintained that it could also endanger the bank’s main goal of preserving stability in the euro area.

Mr Stark had demanded that instead of driving up the debt spiral, the debt-ridden nations should tackle the root cause of the present crisis.

Announcing Mr Stark’s surprise resignation, ECB said he will leave office nearly three years earlier than his term’s expiry in 2014 for “personal reasons”.

An ECB statement said that Mr Stark, who is a member of the ECB governing council, will continue to function on his post until a successor is found before the end of this year.

His resignation led to stock market turmoil across Europe, while the euro fell to $1.365.

In Frankfurt, the DAX recouped some of its losses earlier in the day after a week of volatile trading, but fell 4 per cent as the resignation rattled the markets and closed at 5,189.93 points.

In Paris, the CAC 40 index plunged 3.6 per cent to close at 2,974.59 while London’s FTSE 100 ended the day at 5,214.65, 2.35 per cent lower.

Mr Stark’s resignation came as the finance ministers and central bank governors of the G-7 nations opened a two-day meeting in the French port city of Marseilles to work out ways to avert a global recession and to deal with the euro zone sovereign debt crisis.

Mr Stark has been saying that euro-zone nations should take further measures to consolidate their budgets, scale down their debts and to increase the competitiveness of their economies through urgently needed reforms.

Over a month ago, Mr Stark had strongly opposed the ECB governing council’s decision to resume its bond-buying programme amid concern that the euro-zone’s larger economies such as Italy and Spain may be sucked into the debt crisis.

It began buying the bonds of countries threatened with a debt default after Greece was bailed out with the support of a financial rescue package of €110 billion in May last year.

Published on September 10, 2011

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