Euro tumbles as ECB board member Stark quits
The European Central Bank is in crisis after Juergen Stark resigns, apparently in protest at the bank’s controversial policy of buying bonds issued by ailing eurozone members.
Mr Stark, a member of the the European Central Bank’s executive board, has resigned in a row over the bank’s controversial bond-buying programme.
Juergen Stark is stepping down, reportedly amid conflict over the policy of buying up bonds issued by governments hit hardest by the sovereign debt crisis gripping the eurozone, in a bid to halt soaring borrowing costs.
In a statement, the bank said Stark had announced he would leave his post on its six-member executive board and governing council for “personal reasons”.
German Deputy Finance Minister Joerg Asmussen is expected to replace Mr Stark on the executive board.
The euro and European stock markets fell in response to the news, which analysts said was a sign of deep divisions amid the bank’s policymakers.
The european currency had hit a six-month low against the dollar within hours.
This is a sign of huge problems within the central bank. The Germans clearly have a problem with the direction of the ECB. Manfred Neumann
Mr Stark is the second German economist to leave the bank this year after Bundesbank chief Axel Weber quit in February, also in opposition to the bond programme.
Critics say buying sovereign bonds from Italy is only encouraging the Italian government to slacken efforts to shore up its own finances.
Manfred Neumann, emeritus economics professor at Bonn University, said: “This is remarkable.
“Stark held the same view of the bond-buying as Axel Weber and the current Bundesbank president. It is a position that all the Germans have. This is a sign of huge problems within the central bank. The Germans clearly have a problem with the direction of the ECB.”
The ECB’s experienced president, Jean-Claude Trichet, is due to retire at the end of October.
He will be replaced by Mario Draghi, whose native Italy has been under attack from volatile markets.
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