Brussels - AFP
Pressure mounted on the European Central Bank (ECB) on Monday to become the debt-crippled eurozone\'s lender of last resort, with Poland -- a key strategic partner for Germany -- warning of \"catastrophe\" without policy change. \"We have a hideous choice... either a massive intervention from the ECB or a catastrophe,\" Polish finance minister Jacek Rostowski, whose country plans to enter the eurozone in 2015, told a German newspaper. \"There is a danger of a historic economic disaster -- like the Great Depression in the 1930s -- that would lead to war in Europe,\" Rostowski said. He insisted Germany itself cannot escape being sucked in by financial market contagion that has already spread from Greece to three of the big four eurozone economies, Spain, Italy and now France. With Italy\'s near two-trillion-euro debt pile the main current focus of market attention, bailout rescue funds simply are not large enough to cope. Since Italian Mario Draghi took over as president at the start of the month, the ECB has come under increasing pressure to act as the so-called \"lender of last resort.\" Even the German head of the European Bank for Reconstruction and Development (EBRD) said on Monday that a bad past experience with flooding was no excuse for not keeping a fire extinguisher to hand. So far, the Frankfurt-based central bank has refused to take on a role equivalent to the Federal Reserve in the United States, or the Bank of England, which would allow it effectively to \"print money\" when deep in trouble. The ECB argues that its statutes say its sole responsibility is to protect against inflation -- and although it has won backing from German Chancellor Angela Merkel, her party conference did pass a motion last week accepting the \"last resort\" principle. The European Commission, the EU executive that is part of audit inspection or bailout missions in Athens, Rome and elsewhere alongside the ECB and the International Monetary Fund, also underscored its wider interpretation of the ECB mandate on Monday. Olivier Bailly, the commission\'s senior economics spokesman, said the EU treaty requires the ECB also \"to ensure the stability of the EU as a whole and of the euro area in particular.\" He said \"several tools and instruments\" were at its disposal, and while it was up to the board of the ECB \"to decide when and how to implement them,\" he underlined: \"We trust the central bank to act in a wise way.\" A senior EU source speaking on condition of anonymity stressed that ECB leaders will keep buying bonds from euro countries facing runaway borrowing costs -- not least because an eventual break-up of the eurozone would mean the end of the board members\' employment. Besides, this source said that, looking to recession next year: \"To suggest that inflation is the danger today in Europe is ridiculous. \"It\'s the last problem we should be worrying about.\" Another EU diplomat working day-in, day-out on these issues but not authorised to speak under his name, said that London, Paris and most of the rest of Europe -- backed by G20 -- have for weeks and months now been \"dragging the German horse to water.\" France certainly reckons Berlin will be forced to drink from the well, and that saving the eurozone can be done no other way. The question then is how to control states\' fiscal discipline -- hence, commission proposals due Wednesday giving Brussels the power to intervene directly and rewrite countries\' national budgets. To understand the reluctance in Germany, you have to step back into early 20th-century history. Whether from west or east, the collective memory remains scarred by the experiences of the 1920s when the central bank printed too much money, leading to hyperinflation and eventually, the rise of Nazi dictator Adolf Hitler.