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The euro zone should have started off with fewer members, and struggling members should be pushed out, a former European Central Bank (ECB - click here for an explanation) member who helped shape the euro at its inception told CNBC.
Otmar Issing, the respected German economist and former member of the Bundesbank, said: “We should have started with a smaller number, no doubt about that, with stricter rules. But this is spilled milk. Now we have this composition, and the idea that we should have a policy that no country ever should leave is something which is an invitation to blackmail.”
“A break up of the euro area would be a major disaster – no doubt about that. But the alternative to that, being a monetary union in which the reputation of the ECB would be undermined, or even destroyed. The euro would tumble and governments would pile up debts without any limit. I think this is a scenario – a horror scenario – which comes close to the disaster of a break up.”
His comments follow Eurogroup President Jean-Claude Juncker’s comments earlier this week that a Greek exit from the euro zone could be “manageable.”
Issing also believes that over-reliance on the ECB to bail out the euro zone is “very dangerous” and said the ECB should avoid a scenario where it has to save the single currency area.
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