European Central Bank Executive Board member Juergen Stark will step down from his post, because of a conflict over the ECB's controversial bond-buying programme, sources told Reuters today.
The ECB confirmed Stark would be the second German policymaker to leave the bank this year after Bundesbank chief Axel Weber quit in February - a move also spurred by his opposition to the bond programme.
The bank said Stark had resigned for personal reasons but two sources told Reuters it was related to the bond-buying that has rescued Italy and Spain from crisis over the past month and the euro and European stock markets fell in response.
Stark's departure would be a severe blow to the ECB, whose experienced president, Jean-Claude Trichet, is due to retire at the end of October. Trichet will be replaced by Mario Draghi, whose native Italy has been under attack from markets.
Stark and Germany's Bundesbank President Jens Weidmann, together with two other members of the ECB's 23-member Governing Council, opposed the revival of ECB's bond-buying last month. The ECB reactivated the programme after a 19-week pause to help hold down borrowing costs in Italy and Spain.
The ECB is, however, concerned that by buying the sovereign bonds of Italy - the euro zone's third largest economy - it is only encouraging the Italian government to slacken efforts to shore up its finances, and has been irritated by flip-flopping in Rome.
Stark, 63, had been a member of the ECB's six-member Executive Board since June 2006 and held the influential economics portfolio. His term on the board, whose members form the Governing Council along with the 17 euro zone national bank chiefs, was due to run until May 2014.
The news that Stark will resign comes amid sharp criticism of the ECB's actions by some economists and politicians in his native Germany.
Trichet took aim at Germany, France and Italy yesterday for watering down the budget rules in Europe's Stability and Growth Pact, saying this contributed to the fiscal mess that ultimately pushed the ECB into buying the debt of troubled economies on bond markets.
''If we have embarked into the SMP (bond) programme, it was because the governments in question had not behaved properly," he said in an impassioned defence of the ECB's record at its monthly news conference.
Stocks in Europe and the euro plunged this evening, partly due to the resigniation of Stark and also after a weak opening on Wall Street on scepticism over a US jobs stimulus.
The euro fell below $1.37 for the first time since February, to stand at $1.3687 this evening.
Mario Draghi, who will become ECB president in October, said he had no comment on the departure of ECB Executive Board Member Juergen Stark.
The chairman of the Eurogroup of euro zone finance ministers, Jean-Claude Juncker, said he would not comment until after talking to German Finance Minister Wolfgang Schaeuble and the leadership of the ECB.
German Finance Minister Wolfgang Schaeuble said this evening he regretted but respected the decision of Juergen Stark to quit his post from the ECB.
Schaeuble said on German television that he expected a German candidate to succeed Stark. He said his successor will pursue the same policies of stability as Stark.
