FRANKFURT, Oct 28 (Reuters) - European Central Bank Executive Board member Juergen Stark hit out at recent talk of a global currency war on Thursday, and sent a warning that high government debt levels could drive up interest rates.
“‘Currency wars’ is not a good term,” Stark said during a podium discussion at a Transatlantic Business Conference.
He also warned that high government debt levels will lead to an increase in interest rates for borrowing and said that the financial sector was likely to shrink in the coming years.
“We must live with a shrinking of the financial sector for some time,” he said.
The ECB is expected to keep euro zone interest rates at a record low 1 percent for the 18th month running at its monthly meeting next Thursday. (Reporting by Marc Jones)