The European Central Bank’s outgoing chief economist says another euro zone debt crisis can be averted, but only if states surrender some sovereignty over their budgets.
Jürgen Stark told euronews: “We cannot go on running high budget deficits in several euro zone countries each year, the debt level is going to explode. This is a burden for further generations, it is a burden for the economy in the future. For all this reasons there is no alternative to reducing the debts.”
Stark says deeper economic and political integration is the answer. He opposed the ECB’s recent bond-buying programme.
“It is not enough to recapitalise the banks. A lot of things should be done. First of all we do need to send a signal of credibility to the markets. We should show that we are ready to solve the budget problems. It is not enough to make announcements, we should put measures into practice.”
Our correspondent Rudolph Herbert explained that the big decisions on how Europe is going to overcome the current economic crisis will be taken this weekend when EU heads of government meet in Brussels.