UPDATE 2-ECB’s Stark resists more bond buys, against "E-bond"

* Rejects pressure to step up bond-buying programme

* Sees no currency crisis, but a debt crisis in some states

* Says onus on governments to tackle crisis

* Opposes joint sovereign bonds for euro zone states

(Adds quotes, background)

By Josie Cox and Paul Carrel

FRANKFURT/BERLIN, Dec 7 (BestGrowthStock) – European Central Bank
policymaker Juergen Stark has dismissed calls for the ECB to
step up its bond-buying programme and rejected the idea of a
common European sovereign bond.

Stark, a German, said there was “no currency crisis” in the
euro zone but rather a sovereign debt crisis in some countries,
adding in a Tuesday newspaper interview that the ECB expected
governments to respond by rethinking their budget rules.

The ECB’s bond-buying programme has been the focus of its
contribution to tackling the debt crisis but has led to a rift
within the central bank with German Bundesbank chief Axel Weber,
one of the ECB’s most influential policymakers, recently saying
it should be scrapped. [ID:nLDE69B266]

When the Suddeutsche Zeitung put it to Stark that
politicians were urging the ECB to step up its bond buying, he
said: “We are not at a bazaar here. ‘Politicians make demands
and the ECB jumps’ — Europe doesn’t work like that.”

“We have a clear separation of responsibilities between
governments and the central bank,” he added. “The problems must
be tackled at their root, that is to say with state debts that
are too high and inadequate structural reforms.”

His rejection of a proposed European sovereign bond echoed
comments by German Chancellor Angela Merkel. They also reflected
a grassroots concern among Germans that they could be exposed to
more risks stemming from weaker euro zone countries, which many
regard as having lived beyond their means while Germany has
shown more prudence.

Merkel on Monday rejected a call from Eurogroup chairman
Jean-Claude Juncker and Italian Finance Minister Giulio Tremonti
for the issuance of joint European sovereign bonds, or so-called
“E-bonds”. [ID:nLDE6B50IQ]

Mass-selling German daily Bild responded to the E-bond idea
with a Tuesday headline reading: “EU wants to make euro soft!”

Stark echoed Merkel’s view, telling daily Sueddeutsche
Zeitung: “Each country needs to be held responsible for its own

“We are not experiencing a currency crisis, but a crisis of
state financing,” he said.

Stark expected European Union leaders to reconsider their
approach to a stable currency union. “What we have heard so far
cannot be the last word,” he said.

Differences between euro zone policymakers are making
markets uneasy, reinforced on Monday when euro zone ministers
took no new steps to quell the crisis. [ID:nLDE6B60CJ]


The ECB’s government bond purchases edged up last week,
figures on Monday showed, although whether its controversial
programme has really moved up a gear is unlikely to be clear
until next week. [ID:nLDE6B51P7]

The ECB was continuing to supply banks with as much
liquidity as they need, Stark said, adding that demand had
nonetheless fallen from more than 800 billion euros during the
summer to around 500 billion now.

“The money market is normalising,” he added. “But there are
tensions with sovereign bonds. They could spill over into the
real economy.”

Yet Stark, an ex-vice president of the German Bundesbank,
said it was up to politicians to tackle the debt crisis.

“It is very clear that the responsibility lies with the
governments. We have our mandate, namely price stability.”

Eurogroup chairman Juncker said the idea of euro zone bonds
had not been raised at Monday’s meeting of euro zone finance
ministers and that the EU debt crisis fund had enough resources
to weather the threat of contagion. [ID:nLDE6B40EJ]

Former West German chancellor Helmut Schmidt singled out
Juncker and ECB President Jean-Claude Trichet for praise among
the bloc’s leaders, but called the Bundesbank “reactionary” and
Merkel’s policies “not very clever.

“In general I would say that Europe lacks leaders … who
have enough of an overview of national and international issues,
and who have sufficient ability to judge things,” he told German
business daily Handelsblatt. [ID:LDE6B60CC]
(Additional reporting by Dave Graham; editing by Patrick Graham
and Susan Fenton)

UPDATE 2-ECB’s Stark resists more bond buys, against "E-bond"