FRANKFURT (MNI) – Eurozone government must avoid a selective
default for Greece and stop the political “yo-yo” that is creating
uncertainty in the markets, European Central Bank Executive Board member
Juergen Stark said in an interview with Germany’s BoerseZeitung.
Governments must stick to the decision they made at their June
23-24 summit, at which they committed to avoiding a selective default
for Greece, Stark said.
“If changing that decision is now being debated, it illustrates the
half-life of political decisions,” Stark said. “This is political yo-yo.
It is exactly what creates uncertainty in the market.”
Stark, the ECB’s chief economist, said he expects government
leaders to stick to what they decided less than four weeks ago.
He also cautioned that a lack of political leadership and
constantly changing proposals have put Europe in a situation in which
politicians are being forced to make decisions for purely political
reasons.
A good step to help the Eurozone out of the current crisis would be
to make the rescue fund (EFSF) more flexible, Stark said. “The ECB has
repeatedly demanded that the mandate of the EFSF be increased so that it
can purchase debt on the secondary market.”
Such a move would unlikely be seen as a “selective default,”
although it could not be entirely excluded, Stark said.
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–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
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