The European Central Bank is correct to intervene in only very rare circumstances in currency markets, ECB executive board member Jürgen Stark said yesterday.
Mr Stark, speaking at a conference in Dublin, said the ECB did not have an exchange rate target for the euro, and that there was "no strong will" to intervene in currency markets.
Asked if currency intervention was a tool available to the ECB, he said: "It seems to be available, yes, as an instrument, and it is for good reason very rarely used."
ECB president Jean-Claude Trichet rarely talks about currency issues, saying the ECB targets inflation rather than exchange rates, and sticks to the position of the Group of Seven industrial nations.
In line with the G7's proposals to resolve global trade and investment imbalances, Mr Stark called for greater currency flexibility from emerging Asian economies.
"In the United States, further action including fiscal consolidation is needed to boost national saving.
"For emerging Asia, with large current account surpluses, greater exchange rate flexibility is required," according to Mr Stark.
The ECB intervened in currency markets in 2000 to stem a slide in the common currency. In September 2000 it joined forces with the Bank of Japan and the Federal Reserve to buy euro, the central banks all using their reserves.
The action was followed by three waves of unilateral ECB intervention in November 2000 and succeeded in putting a floor under the euro at 82 cents.
