Former European Central Bank heavyweight Juergen Stark heaped pressure on the ECB's new leadership on Friday, using a high-profile German newspaper interview to say the euro zone is not yet out of its crisis and the inflation potential has increased.
In the six-page interview with Germany's leading business daily, Handelsblatt, Stark took a far more downbeat view of the euro zone situation than ECB President Mario Draghi, who is already dealing with pressure from Bundesbank chief Jens Weidmann to unwind some of the ECB's crisis-fighting measures.
Stark did nothing to allay Germans' concerns that the 1-trillion euros the ECB has pumped into financial markets in recent months with twin three-year funding operations could stoke inflation.
The world financial system is on drugs, Handelsblatt ran a front-page headline quoting him as saying.
The memory of hyper-inflation in the 1920s, when a wheelbarrow full of cash was needed to buy a loaf of bread, has left Germans with a strong aversion to price rises - even if current inflation comes at a time when most of the euro zone is sinking into recession.
Draghi has tried to soothe relations with the Bundesbank and allay concerns, giving an interview to mass-selling German daily Bild earlier this week in which he said the worst of the crisis was over.
He also vowed to act if inflation risks grow.
But Stark said the inflation potential had grown.
We are not in normal circumstances, said Stark, a former Bundesbank vice-president.
We have this ultra-loose global monetary policy plus a very expansionary fiscal policy in most developed economies, so a change in inflation expectations can result from this constellation, he told Handelsblatt, which ran a picture of children playing with bundles of banknotes in 1923, when Germany was suffering from hyperinflation.
Stark said he quit the ECB last year because a decision the bank took in August to reactivate its bond-purchase programme on condition that governments conduct reforms took the bank into the realm of politics, compromising its independence.
Trust is being lost in the central bank's competence to do the things it is obliged to under its mandate, he said.
We are not yet out of the crisis - neither out of the financial crisis, nor the economic crisis, nor the public finances crisis, he added.
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(Writing by Paul Carrel; editing by Patrick Graham)