Top ECB official quits over bond-buying policy
Frankfurt, September 10, 2011
The top German official at the European Central Bank (ECB) has resigned out of the blue in conflict with the bank's policy of buying government bonds to combat the euro zone's debt crisis.
The ECB on Friday confirmed Executive Board member Juergen Stark, the central bank's chief economist, would leave by the end of the year once a replacement was found.
The euro fell and shares tumbled on the shock development, which laid bare a rift inside the central bank over the handling of the worsening debt crisis, and could undermine German public support for the euro.
While Stark gave no public explanation for his resignation, he sent an article to German financial daily Handelsblatt for publication next Monday in which he said the only solution to the debt crisis was for governments to cut spending.
ECB bond-buying arrested market contagion to Italy and Spain that threatened to overwhelm the euro zone's defences in August, giving governments a breathing space to work on policy solutions to the worst crisis in the single currency's history.
The hawkish Stark's departure, almost three years before his term is due to expire in May 2014, may deepen the gulf between the ECB and German guardians of central banking orthodoxy.
German Finance Minister Wolfgang Schaeuble said he regretted Stark's decision but he expected another German, committed to stability policies, would take his ECB seat.
A source familiar with the matter said Schaeuble's deputy, Joerg Asmussen, a pragmatic civil servant who has been at the heart of financial crisis management, would replace Stark on the ECB's executive board.-Reuters