Oct. 12 (Bloomberg) -- European Central Bank Executive Board member Juergen Stark said the euro area needs a “major strengthening” of economic governance if the currency area is to solve its problems.
The “ultimate objective” is “institutional arrangements that provide credible incentives for sound policies,” Stark said at an event in Riga today. Countries “should be aware this requires the transfer of sovereignty to a central institution with much stronger powers.”
Stark announced his resignation from the ECB board on Sept. 9 after signaling discontent over the ECB’s program of buying the bonds of debt-strapped European governments. The European Parliament’s economic committee endorsed German Deputy Finance Minister Joerg Asmussen as Stark’s replacement on Oct. 10.
The reform package agreed by the European Union “falls short of the ‘quantum leap’ in economic governance that the ECB has long advocated for the euro area,” Stark said.
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