Governments, not the European Central Bank, have to solve the sovereign debt crisis, one of the bank's top policymakers Juergen Stark was quoted as saying on Saturday.
ECB policymakers have become increasingly vocal in urging governments to take action to tackle the current debt crisis, which has forced a near 200 billion euro bailout of Greece and Ireland, and put pressure on countries like Portugal and Spain.
They fear that if the problems escalated further they would be forced to ramp up the bank's controversial purchases of sovereign bonds, something they are eager to avoid.
What is crucial in the current crisis is that governments should take action in their area of responsibility and take the right measures, Stark, one of the ECB's six-member Executive Board, told the Greek newspaper To Vima.
We are not in charge of fiscal policy. Our mandate is not to make it easier for governments to refinance their debt.
Stark also said in the interview, to be published on Sunday, but made available to news agencies on Saturday, that the ECB was entrusted with keeping prices stable within the 16-country common currency region, and rejected suggestions it should widen its objectives and be more activist to boost economic growth.
What you are asking for is, in principle, higher inflation, he said. We have the clear mandate to maintain price stability. To ask for other objectives would overburden the ECB.
Asked whether it was a good idea to have private sector bondholders having to accept losses in case of sovereign default, as envisioned by the EU, Stark said the plans should follow the International Monetary Fund's policy of only doing so when a country is judged insolvent.
It is important to stress that, whenever the participation of private sector creditors is considered, this should be fully in line with internationally agreed standards and, in particular, in line with the practices of the IMF.
On Friday, Stark's fellow ECB policymaker, Austria's Ewald Nowotny sided with Bundesbank head Axel Weber, who said in November that private investors should participate in paying for any euro zone bailouts, echoing a position taken by Germany but criticised by other ECB policymakers.
In contrast, Executive Board member Lorenzo Bini Smaghi has said forcing private investors to take penalties would destabilise financial markets and encourage speculation as traders could try and force a default.
Stark also rejected the idea floated by Jean-Claude Juncker and Giulio Tremonti that issuing joint euro zone bonds could be one way out of the crisis.
Artificially lowering the interest rate would create a disincentive for the governments concerned and should therefore be avoided, Stark told the newspaper. Eurobonds would not solve the structural problems that some countries are facing.
Stark also repeated the ECB's demand for the EU's budget rules to be made tougher, and criticised the compromises made in the Commission's proposal for new rules after a Franco-German deal jettisoned ECB-backed plans for semi-automatic punishments.
Stark said that if economic governance were tough enough and abiding by budget rules were strictly enforced, there would not even be a need for a permanent bailout mechanism.
Turning to Greece, Stark said the economic programme, which was a precondition for the EU/IMF aid package, remained broadly on track.
However, he warned against a false sense of security and said Greece faced a long, hard slog to correct its economy.
Greece needs to continue structural reforms to lay a sound basis for growth and job creation, he said.
This is not an easy task and we fully recognize that. It is also not a short-term task, he said, and added delays in preparing structural reforms should be addressed urgently.
However, he called the process so far very credible.
Asked whether the Greek aid repayment could be extended, Stark said various options were discussed to avoid Greece having to repay large amounts of debt at once.
In principle, this could be achieved by lengthening the repayment period for the current loans or by agreeing on a new arrangement.
(Reporting by Sakari Suoninen)