March 6, 2021

Resignation at European Central Bank Hints at Split

Jürgen Stark, a German who is the E.C.B.’s de facto chief economist and also a member of its policy-setting governing council, will leave his post as soon as a replacement is named, the bank said.

The E.C.B. said that Mr. Stark was leaving for personal reasons, but analysts speculated that his departure was connected to his well-known opposition to E.C.B. purchases of government bonds, which are part of an effort to ease investor pressure on countries like Greece and Italy.

If so, Mr. Stark’s resignation would be another fissure in the edifice of European unity, which has suffered as wealthier countries like Germany have been asked to underwrite poor performers like Greece.

“It’s a very bad sign,” said Daniel Gros, director of the Center for European Policy Studies in Brussels. “It means that the split within the E.C.B. that we thought was far down the road is here now.

“It puts a shadow over the E.C.B. and risks financial markets asking, ‘How long can they go on buying these Italian bonds?’ This indicates that the answer is, ‘Not as long as I had thought.’ ”

Stock markets in Europe and the United States extended their losses as rumors that Mr. Stark would resign surfaced and then were confirmed by the bank. The euro also fell against the dollar. The sovereign debt crisis continues to weigh on markets and any sign of a deepening in the rift between rich and poor countries could further spook investors.

At the same time, Mr. Stark’s departure could give the E.C.B. a freer hand. Mr. Stark was an inflation hard-liner very much in the German tradition, and his dissent created an impression that the E.C.B. suffered internal divisions. Mr. Stark declined a request for comment.

Reuters reported that Germany would propose Jörg Asmussen, a deputy minister in the German Finance Ministry, to replace Mr. Stark, who is the only German on the executive board. Mr. Asmussen has been a central figure in negotiations with other euro zone countries on how to deal with the sovereign debt crisis.

Mr. Asmussen’s views on monetary policy are not well known, but he comes from the same tradition of German economics that puts an emphasis on price stability and is skeptical of efforts to help countries that run up too much debt. So it is not clear if he would be any more receptive to the bond buying.

Any German member of the E.C.B. board is likely to be mindful of the fierce opposition that bank policy has generated in Germany.

When the Bundesbank, the German central bank, was Europe’s most powerful monetary authority, it made controlling prices its mission. There are significant concerns by some in Europe that the E.C.B. has overstepped its bounds in trying to fight the crisis by acting as the buyer of last resort for Italian and Spanish bonds, efforts intended to hold down the borrowing costs for indebted governments and prevent them from slipping closer to insolvency.

In a statement, Kurt Lauk, president of the economic council for the Christian Democrats, the party of Chancellor Angela Merkel of Germany, called the resignation “a dramatic alarm bell for the fact that the E.C.B. must be led back to the right path.”

It was “an unmistakable signal that the E.C.B. must be freed from its role as supporter of incorrect political decisions,” he added.

“The hawks are all gone and now there’s nothing but doves,” said Frank Schäffler, a federal legislator and finance expert for the Free Democrats, the government’s junior coalition partner. “It’s also a clear sign that the internal tensions are much greater than has been publicly known.”

As the debt crisis continues, the future of the euro zone has come more and more into question. Lawmakers and citizens in countries like Germany, the Netherlands and Finland, which are known for fiscal responsibility, are watching events in Athens and Rome with increasing skepticism and even alarm.

Mr. Schäffler, who opposes bailouts for other debt-burdened European countries, said that it was time for Germany to find a way to stop the E.C.B. from purchasing bonds.

“All of the dams are breaking and there are no more red lines,” Mr. Schäffler said.

Nicholas Kulish reported from Berlin. David Jolly contributed reporting from Paris.

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