Germany’s modern, redbrick and concrete national library, on Frankfurt’s northern outskirts, bears little resemblance to an ancient Coliseum. But on a Friday morning last month, there was the air of a Roman sports spectacle in the first-floor conference room. “The European Central Bank and its watchers XI” is an annual event in which the guardians of Europe’s single currency, the euro, are put through their paces. Centre-stage, being metaphorically thrown to the lions, stood Jürgen Stark, 61, dressed in a dark suit and light blue shirt, his moustache carefully trimmed. Facing him were ranged some of the best economic minds in Europe and America. Stark, a former vice-president of Germany’s famously austere Bundesbank, has headed the economics section of the ECB since June 2006. During the global economic crisis, he acted as the conservative conscience of Europe’s policymakers, urging a disciplined approach that emphasised thrift, caution and a strict focus on combating inflation.

Back in February, when global gloom was at its severest, Stark told me that a central banker risked losing his credibility if he acted “only on the basis of fears”. “In my view, it is more important to continue with a gradual approach,” he said. But that was a hard stance to maintain as governments and guardians of monetary policy around the world threw away the rule books to combat the credit crunch – and even the ECB slashed interest rates further and faster than ever before.

Stark cultivates a hardline image – his surname is the German word for “strong” – but that morning there were light, or at least sardonic, touches. In the US, he noted dryly, “everything is great”. There was the “Great Depression” of the 1930s and the “Great Inflation” of the 1970s. Stark paused. “I’m not so sure it was so great,” he said. Then there was the “Great Recession”, as some people are calling this period. Stark wanted to explain the ECB’s “exit strategy” – how the central bank would unwind “in a timely fashion” all the exceptional measures it has taken – and to warn governments of the perils of not quickly reining-in public sector debt. But pointed criticisms came quickly. He railed against economic growth “based on large and growing imbalances, reflected in asset prices and credit bubbles as well as global current account imbalances, which ultimately proved to be unsustainable”. And he attacked “potentially flawed indicators and concepts” used by US-trained economists.

Loosely translated from central bank-eese, Stark’s messages are simple: that the world economy went badly wrong; that earlier restraint would have produced better long-term results; that the Anglo-Saxons do not necessarily have the right solutions; and that there are dangers associated with bailouts on a massive scale. In any case, he says, what we’re due now is a strong dose of conservative prudence.

Over the past year, Stark’s creed has been out of synch with mainstream thinking in Washington and London. But he may speak for more people, especially in continental Europe, than policymakers in the Anglo-Saxon capitals. Taxpayers’ fears about the long-term costs of expensive bank rescues are universal, as are worries about the risks to the system and stability posed by dramatic economic rescue action. (In Europe, Stark is not the voice of the ECB; its president is Jean-Claude Trichet, a former French bureaucrat. But Trichet’s thinking is not so far removed from Stark’s.)

There was a palpable frisson when the discussion in Frankfurt was opened up. “This is almost as exciting as Basel on a Saturday afternoon,” quipped Vincent Reinhart, a former US Federal Reserve director. Stark was criticised for asserting that “there are no deflationary risks” associated with the current weakness of the European economy – and for hectoring politicians (the ECB’s habit of commenting freely on what governments are doing contrasts with a much more reticent approach by the US Fed) while vehemently defending the ECB’s political independence. In Stark’s view, central bankers, like Caesar’s wife, should be above suspicion.

In the break, two analysts from a big US investment group wondered whether Stark was smart or just dogmatic. The consensus, over coffee, was that as the intensity of the crisis receded – and the focus switched to reviving long-term growth prospects – Stark’s focus on “stability-orientated” policies could start to gain the upper hand. “It was a pretty hostile atmosphere, but I think he senses the tide is turning,” said a European economist. “He even made three jokes – I have never heard that before.”

. . .

Stark was born on May 31 1948, three weeks before the launch of the Deutschmark. His father owned a vineyard in Gau-Odernheim in the Rheinhessen wine region. Jürgen, the younger of two brothers, initially considered taking over the running of the vineyard. “I would not say that I grew up in poverty, that would be going too far,” he told me a few days after his Nationalbibliothek speech in his ECB offices. But Germany’s struggle to rebuild its economy from postwar ruins “created in my home area, and particularly in the home in which I grew up, a sense of being modest … and always knowing what your roots are. This is an important point: to know what is do-able, not to allow excesses.”

Stark as a young economics student at Tübingen University in the early 1970s

From 1968 to 1973, Stark studied economics at the universities of Hohenheim and Tübingen, both close to Stuttgart. It was a time of social tension and student radicalism in Germany, and across much of Europe. “I also took part in demonstrations, including against Vietnam,” he says. “We all, more or less at one point or time or another, had revolutionary ideas about what was just. But this was an episode that came to an end with the end of my studies. Then I became more serious.”

After working as a university research assistant, Stark took a job at the economics ministry in 1978 in Bonn, then Germany’s capital. At the time, the ministry was among the most influential in the Bonn republic, and from the start, Stark was among elite decision-makers. Contemporaries included Hans Tietmeyer, who went on to head the Bundesbank, and Horst Köhler, who later became managing director of the International Monetary Fund and is currently Germany’s federal president. Stark says this was a period in which his ideas crystallised. His initial speciality was in labour markets, and the prevailing school of economic thought was Ordnungspolitik – the distinctly German tradition (without a real translation or equivalent in English) that allows markets to operate freely, but with clear rules and limits. The framework developed as a reaction to the brutal interventionism of the Nazi regime. Together with an abhorrence of inflation dating from the hyper-inflation of the 1920s, a reliance on exports stemming from postwar necessity and a long-established German industriousness, Ordnungspolitik helps explain how German policymakers have thought since 1945.

And yet the global economic crisis that erupted in August 2007 forced a policy reaction that appeared to have little to do with Ordnungspolitik. The ECB was the first of the big central banks to respond to the initial seizing-up of financial markets (which turned into the global “credit crunch”). It pumped €95bn of emergency money into the eurozone banking system on the first day, ensuring banks had the liquidity they needed to function.

. . .

The headquarters of the European Central Bank in Frankfurt

Stark has had extensive experience of global economic tension. He recalls working with the US during the late 1990s Asian financial crisis. The American approach, according to Stark, was: “We need the fire brigade! How to resolve the fundamental problem – this is an issue for tomorrow. First of all, we need to extinguish the fire, then we talk about the consequences. The continental European approach, and my personal approach, is different: to be more cautious, otherwise you create moral hazard.” This, Stark makes clear, is one of his biggest concerns in the current crisis: that by bailing out countries or companies, central banks and governments simply encourage further recklessness in the future.

The irony is that the ECB was far more active than Stark’s manner would suggest. After the US let Lehman Brothers collapse, with immediately disastrous consequences, European policymakers vowed not to let the same happen on the continent. The ECB’s generous liquidity provision, and its behind-the-scenes lobbying to ensure agreement on emergency bank rescue packages, was one reason they succeeded.

As a financial market crisis turned into a global economic slump from September last year, the ECB cut its main interest rate to a record low of 1 per cent. But the cuts in its official interest rate were only part of the story. The ECB’s support for banks – since the collapse of Lehman it has met in full their demands for loans of up to one-year’s duration – meant market interest rates, which are more relevant for homeowners or companies, fell as low, or even lower in the eurozone than in the US.

By all accounts, such measures only came after lively debate within the ECB’s secretive 22-strong governing council. Did Stark object to going so far and so fast? After his talk at the Nationalbibliothek, when I had asked him if continental Europeans were winning the battle of ideas over how to handle the crisis and its aftermath, he said: “We all have to learn our lessons, some institutions and policymakers more than others.” That morning’s audience had “appreciated the role that we [the ECB] have played as a young institution … Given the challenges and stresses and the high degree of uncertainty, I think that we have performed well.” It sounded like bragging and perhaps Stark noticed because he slipped back into central bank-eese to add: “And not only ‘well’: in my view, ‘appropriately’.”

. . .

Carrying gold to the bank in Berlin in 1923. The hyper-inflation experienced by Germany in the 1920s has affected economic policy ever since

In 1988, Stark took a big career step, moving from the economics ministry into Helmut Kohl’s chancellery, which then occupied a low-rise but forbidding building on the banks of the Rhine. Policy in Germany, where the economy was then growing strongly, was just as austere as the architecture. Johannes Ludewig, a former chancellery colleague who later headed the Deutsche Bahn rail system, says that, looking back, “you might have had the impression that we were aware that [German] reunification would come up. We ran policy in the 1980s as if we were aware that a major challenge would come up.” After the Berlin Wall fell, Stark helped arrange the negotiations that reunited east and west, and took part in debates about a European monetary union, which were then gearing up. He developed a reputation as a hard worker, disciplined in his communication. “He is not an extrovert. He maybe talks less than other people. But knowing him, you know how he is thinking,” says Ludewig. Stark has an intellektuelle Redlichkeit – or intellectual integrity, Ludewig adds.

In 1992, Stark switched departments again, to the finance ministry, where he became a state secretary and helped prepare for the launch of the euro. Arguably his most important legacy was Europe’s “stability and growth pact” – a set of fiscal rules agreed for countries that join the eurozone – which he largely authored. He also fought successfully against French attempts to impose a gouvernement économique to co-ordinate fiscal and monetary policy – which he saw as threatening the independence of the new central bank. Stark relished his image as a fiscal hawk. “He could introduce himself at international meetings as ‘Stark – wie die Mark’ [Strong, like the Deutschmark],” recalls Theo Waigel then finance minister. “He could remain cool and make no compromises as far as stability went.”

It was a testing time for Germany’s political masters as the costs of reunification soared and it became unclear whether the country would itself meet the fiscal requirements for entry into the euro. Just before the Kohl government was voted out of office in 1998, Stark moved to the Bundesbank. He soon came into conflict with his successor at the finance ministry – Heiner Flassbeck, who had known him in his economic ministry days. “Whenever questions about Germany’s contribution to reviving the world economy or being the engine of the world economy came on the horizon, Stark was up in arms,” recalls Flassbeck.

Stark fought other battles, too. The governments in Germany and France were ripping up his “stability and growth pact” (which Romano Prodi, the Italian European Commission president, memorably described as “stupid”). And in 2004, the Bundesbank faced its own crisis: Ernst Welteke, its president, was forced to resign after accepting hospitality from Dresdner Bank. Stark was a possible successor – but was not in favour with the government of Social Democrat Gerhard Schröder. Two years later, however, the Christian Democrats were back in power and while the Bundesbank president’s job was no longer up for grabs, chancellor Angela Merkel won Stark his position on the ECB’s six-strong executive board, headed by Trichet. Europe was about to get a serious dose of German economic conservatism.

. . .

Like Roman consuls, the ECB board members regularly despatch themselves to explain their actions across the eurozone. A few days after our interview at Stark’s office, I meet him at the airport to catch a lunchtime flight to Berlin. This afternoon he is to deliver a speech to the Kieler Konjunkturgespräch – a conference on the economic outlook. Perhaps such day trips are the more enjoyable part of his job, I suggest. “Central bankers never have fun!” he replies.

A limousine is waiting at Tegel airport and we arrive at the Bundesbank’s Berlin offices with an hour to spare. Over another coffee, Stark is eager to continue our conversation. “In my view, to put it in a nutshell, the global growth model of the past 15 years has failed,” he says. At fault were the global imbalances that had been allowed to develop; he means the huge debt-fuelled expansion in the US and the effect China’s control over its exchange rate had in preventing a global economic rebalancing.

What about Germany’s long history of large trade surpluses, I ask? At recent summits, US and UK policymakers have argued that this is another source of imbalance. Stark insists there is a clear difference. “The trade surplus is not based on a political decision… it is market-driven and has to do with the fact that Germany has become more competitive.” It is another way of saying that, while US and Chinese leaders could have taken action, there is little German politicians could (or should) have done.

. . .

The conference in Berlin is being held at the new Canadian embassy building, and Stark’s speech will be in English. German is better for nuances, he thinks, but these days his words wind up being translated and beamed around the world – so he might as well use choose them himself. Stark is the big attraction today. His main themes are familiar, but there are some interesting twists. Prior to the crisis, Stark tells his audience, there was scepticism about whether extra government spending could really help steer an economy out of recession. Dennis Snower, the head of the Kiel economic institute and chairman of this session, is keen to be provocative. Maybe financial regulators who allowed the financial market crisis should be sent to jail, he says. “Why start with regulators?” says Stark. What about the boards of banks, their risk managers, external auditors and credit rating agencies, he wants to know. “All these layers have failed – and maybe all the mainstream economists have failed.”

Stark does not go unchallenged. Gustav Horn of the trade union-backed Hans-Böckler research foundation, is worried about his obsession with running economic policy according to rules written before the crisis. “Mr Stark has done things in the last two years that he couldn’t have imagined doing,” says Horn. “So even in monetary policy, you need discretion. It is about judgment. That is why we need central bankers.”

Towards the end of our conversation in the Bundesbank’s Berlin office, I had asked Stark if he would like one day to become the German central bank’s president. Angela Merkel’s re-election at the head of a coalition that brings the free-market Free Democrats back into power could have turned the tide in his favour. “I have never had any career plans,” Stark said. He will be 66 when his eight-year non-renewable ECB mandate expires in 2014. He and his wife, Christine, whom he married in 1973, have a retirement house on the Baltic sea. They have two children. And he has other pursuits; he is on the board of Frankfurt’s Senckenberg natural history museum, reflecting his interest in palaeontology. But he does not dismiss the idea entirely.

. . .

At the post-conference dinner following Stark’s speech at the Nationalbibliothek, he occupied a prominent spot at the table – in a restaurant on Frankfurt’s Palmengarten botanical gardens. It was raining, but there was a relaxed, end-of-the-week mood. The organisers had arranged an informal discussion on sofas between Athanasios Orphanides, the central bank governor of Cyprus, and David Marsh, a former FT journalist and author of a book on the euro. The topic was Europe’s monetary union, a project dreamt of since Roman times – and finally launched in 1999.

Orphanides stressed the benefits to Cyprus of sharing a stable, world-ranking currency. Marsh took a more cynical line: euro membership brought big early gains to many European countries by lowering borrowing costs and removing exchange-rate risks. But eurozone politicians were meant to exercise a firm grip over public finances and competitiveness. In the past 10 years, that obligation was often forgotten, compounding governments difficulties’ in the current crisis – a point made repeatedly by the ECB, and by its head of economics in particular.

As Marsh exclaimed to raucous laughter: “You think you are in paradise – and then you meet Mr Stark!”

Ralph Atkins is the FT’s Frankfurt bureau chief.