ECB chief economist Stark warns against IMF funds for eurozone
23 Dec 2011
The European Central Bank's chief economist Juergen Stark, who is stepping down at the end of the year, warned against mobilising the IMF's funds for bailing out eurozone countries.
In an interview with German daily Die Welt, "It's an attempt to get round the ban on direct monetary financing in Europe," when asked about a proposal to increase IMF's war chest to support debit-ridden eurozone countries.
Stark said that in theory lending to he IMF would not constitute monetary financing of Eurozone countries because the money would go into the Fund's general account, adding "But in practice, I don't see any countries other than the euro countries who want to get their hands on the cash."
Eurozone leaders at the 9th December summit had agreed to provide up to 200 billion euros ($261 billion) to the IMF to help debt-stricken eurozone members. However, the move raised questions about how the funds could be used and what countries would contribute.
Stark emphasised that by turning to the IMF, Europe would be placing its fate in the hands of "international committees" and the various interests that they represented and therefore Europe must solve its problems on its own and reduce its dependence on the international capital markets by way of rigorous fiscal policies.
He also said that the IMF was becoming a "lender of last resort" by increasing its loan allotment without implementing very strict conditions.
