Debt-driven growth 'unsustainable'
Updated: 2011-09-02 07:00
VIENNA - Europe's pre-crisis debt-driven growth model is "unsustainable," and needs to be changed in order to put a lid on the lingering debt crisis, a top official with the European Central Bank (ECB) said on Thursday.
"The crisis is not over. Not just in Europe is it not over, it is also not over in other regions of the world," said Juergen Stark, a member of the ECB executive board, during the Alpbach Forum economic conference held here in Vienna.
According to Stark, there were two options to solve the current crisis: either to continue the development model as in the past and then pick up the pieces when the bubble explodes, or to take effective measures to prevent the bubbles from forming in the first place. For him, the second option was more favored.
Stark also criticized some countries' government for focusing only on short-term solutions rather than a long-term macroeconomic policy after the debt crisis broke out.
Asked to comment on the risks associated with purchasing national debts of heavily indebted southern European countries by the ECB, Stark said there was no central bank in the world would regard national debt as zero-risk investment product.
"The ECB is the central bank of 17 states and therefore also of Greece and thus the same as that of Austria or France," he added.
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