(Reuters) - European Central Bank Executive Board Member Juergen Stark will step down from his post because of a conflict over the central bank’s controversial bond-buying program, two sources told Reuters on Friday.
The European Central Bank later confirmed the report in a statement, saying Stark would stay on until a successor is appointed, which would happen by the end of the year.
“It suggests there is really a big row in the governing council and this is quite a severe step. It shows how divided the ECB is on this very crucial question.”
“Stark was seen as a capable and skilled man. The question now is who will succeed him? This is crucial, if no one else is positioning themselves as a contrarian, especially in a phase when the ECB is discussing the bond-buying program. At the moment the market will interpret this resignation as weakening the ECB.”
“It’s a sign that ECB policymaking is controversial even within the board. Clearly the German representatives have a position that differs from other central bankers. That makes ECB policymaking more difficult.”
“Evidently there are more and more ECB council members against the controversial purchase of bonds. There is certainly a bit of frustration involved. Stark’s resignation could be seen as a weakening of hardline monetary policy camp. It can only be hoped that his successor would be someone with similar views.”
MANFRED NEUMANN, EMERITUS ECONOMICS PROFESSOR AT BONN UNIVERSITY, FORMER THESIS ADVISOR TO BUNDESBANK PRESIDENT JENS WEIDMANN
“This is remarkable. Stark held the same view of the bond-buying as Axel Weber and the current Bundesbank president. It is a position that all the Germans have. This is a sign of huge problems within the central bank. The Germans clearly have a problem with the direction of the ECB.”
“So it looks like the last hawk is leaving the sinking ship. The direct impact will be very small and shouldn’t change policy. But the loss of Stark, also the ECB’s chief economist, could lead to policy changes down the line. Assuming this is true I would assume that they also discussed a rate cut yesterday. Clearly he’s unhappy with the bond purchases, but we can’t rule out it being a private matter either. It would have to be a severe private issue. Otherwise there is a huge controversy going on in the ECB.”
“While the actual impact should be minor, I think markets will see this as the ECB becoming more dovish and losing some of the German-style stability orientation.”
Reporting by Brian Rohan, Rene Wagner, Klaus Lauer, Stephen Brown, Erik Kirschbaum