Arab Today, arab today markets tumble after ecb\s stark resigns
Last Updated : GMT 10:48:56
Arab Today, arab today
Arab Today, arab today

Markets tumble after ECB\'s stark resigns

Arab Today, arab today

Arab Today, arab today Markets tumble after ECB\'s stark resigns

Frankfurt - Qna

World stock markets tumbled after the shock resignation of Jurgen Stark, a key member of the European Central Bank (ECB) on Friday. The abrupt departure of Juergen Stark from the European Central Bank\'\'s Executive Board Friday heaped new pressure on Europe\'\'s already-stressed financial markets, sinking the euro to its lowest level in more than six months against the dollar and dealing a particularly harsh blow to bank stocks. Juergen Stark\'\'s resignation is seen as a repudiation of the European Central Bank\'\'s strategy of buying government bonds from heavily indebted Italy and Spain to keep their borrowing costs down, according to media reports. Sources said his departure reflected a deep rift at the heart of the ECB, with Mr Stark opposed to the bank\'\'s policy of buying eurozone bonds to support highly indebted countries like Italy and Spain. Mr Stark was considered to be a hawk at the bank, favoring looser monetary policy including higher interest rates. \"Either we will manage to avoid a near-term \'\'systemic\'\' event... and there is a strong rally, or we face a potential repeat of fall 2008,\" said Barclays Capital credit analysts in a note quoted by the Wall Street Journal. \"We expect volatility to remain high until clarity emerges either way,\" they added. The FTSE 100 closed down 2.35pc, the Dax in Frankfurt fell 4.04pc, and the CAC in Paris was down 3.6pc following the news that Stark, the top German official at the ECB, was leaving due to \"personal reasons\". Sources said his departure reflected a deep rift at the heart of the ECB, with Stark opposed to the bank\'\'s policy of buying eurozone bonds to support highly indebted countries like Italy and Spain. Stark was considered to be a hawk at the bank, favoring looser monetary policy including higher interest rates. \"The European debt crisis has metastasized to infect the European banks, many of which are technically \'\'zombie banks\'\' now, for if their holdings of sovereign bonds are marked to market, they would be considered insolvent,\" Stephen Jen, managing partner at investment advisory firm SLJ Macro Partners LLP told the Wall Street Journal today. German economist Juergen Stark said he was quitting his post on the central bank\'\'s policy committee, a move widely seen as a repudiation of the bank\'\'s strategy of purchasing government bonds from heavily indebted countries such as Italy and Spain in order to keep their borrowing costs down. Stark, 63, was the bank\'\'s leading internal opponent of that approach, arguing that the central bank\'\'s role was to check inflation rather than lead a rescue of what some Europeans and a majority of Germans see as less disciplined, high-spending countries.  

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