(Reuters) – The top German official at the European Central Bank is to quit early in disagreement with the bank’s policy of buying euro zone government bonds to combat the currency bloc’s debt crisis.
After Reuters exclusively reported that Executive Board Member Juergen Stark, the central bank’s chief economist, would quit, the ECB confirmed that he would leave before the end of the year once a replacement had been found. Stark’s departure, almost three years before his term is due to expire in May 2014, would deepen a gulf between the ECB, which manages the currency of the 17-nation European currency area, and German guardians of central bank orthodoxy.
Former Bundesbank President Axel Weber, who had been the frontrunner to succeed ECB President Jean-Claude Trichet when he retires at the end of next month, resigned and withdrew from the race in February in protest at the same policy.
“Stark held the same view of the bond-buying as Axel Weber and the current Bundesbank president,” said Manfred Neumann, emeritus economics professor at Bonn University and former thesis adviser to Bundesbank chief Jens Weidmann.
“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.”
Trichet made an emotional defence of the bank’s performance against German criticism at a news conference on Thursday, angrily telling a German questioner that the ECB’s record of inflation fighting in Germany over the last 12 years had been better than the Bundesbank’s.
Stark was one of four members of the ECB’s policymaking governing council who sources said voted against last month’s controversial decision to revive the dormant bond-buying programme and start buying Italian and Spanish debt after the two countries’ borrowing costs ballooned amid market fever.