ECB’s Stark Says Debt Restructuring Risks Triggering Crisis
April 23, 2011, 2:00 PM EDTBy Richard Weiss
(Updates with Stark comments from second paragraph.)
April 23 (Bloomberg) -- European Central Bank Chief Economist Juergen Stark said a debt restructuring by a euro country risked triggering a banking crisis that could “worst case” exceed the effects of the failure of Lehman Brothers Holdings Inc., according to the transcript of an interview posted by German television station ZDF on its website.
There is “no painless way” for countries that sought aid to reduce debt, while a restructuring may cut off the respective country from the financial markets for an unforeseeable time, Stark was quoted as saying.
The only viable path for such countries is to “strictly push through reform programs and repay debt in full,” the central banker was quoted as saying. Stark did not refer to a specific country.
The interview did not contain commentary on interest rates or inflation.
A call to the ECB press office in Frankfurt during non- business hours seeking confirmation of the comments wasn’t answered.
--Editors: James Hertling, Alex Devine
To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net
To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net
