Jürgen Stark On The ECB And Deflation Fears
TheFinancialist: For months, financial market participants have speculated about whether the European Central Bank will implement negative deposit rates or large-scale quantitative easing to counteract persistently low levels of inflation in the euro zone. But at Credit Suisse’s 17thAnnual Asian Investment Conference this week in Hong Kong, Dr. Jürgen Stark, a former member of the European Central Bank’s Executive Board and former Vice President of the Bundesbank, said such extraordinary measures are not warranted. The euro zone is not in danger of deflation, he said. Rather, low inflation rates are being driven by necessary adjustments in the peripheral nations that were hit hardest by the European debt crisis.
In Stark’s mind, in fact, the European Central Bank already overstepped its bounds during the crisis by purchasing sovereign bonds from troubled peripheral countries. The line between the monetary policy role of the region’s central bank and the fiscal responsibilities of individual countries has blurred significantly in recent years, Stark cautioned, and needs to be redrawn more sharply. Watch the video to find out more, including Stark’s take on the Bank of Japan.
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