The euro zone has squandered precious time in making reforms during a time of central bank support for the economy, the president of the Center for Financial Studies, Otmar Issing, told CNBC on Tuesday.
"In some countries time was really wasted," Issing, who is also the former chief economist at the European Central Bank (ECB) and one of the euro's architects, told CNBC on Monday.
"France is an example of that, the new government went in the wrong direction and now they had to move back and a lot of reforms have to be done. A scandalously high youth unemployment rate (26.5 percent for France in April) shows how much has to be done," Issing said.
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Policy makers in Europe should "do their homework" and focus on unemployment in the euro zone, he said, saying the rising jobless rate was "another sign that time was wasted." "Voters voted for governments that promised to spend money but not those that promised reforms- this needs to change and it needs to change faster," he told CNBC in Paris where he is attending the Institute of International Finance's Spring meeting.
Italy also needed to step up the pace of reform.
On Monday, Italy's second biggest bank Mediobanca said its "index of solvency risk" for the country signaled that Italy would "inevitably" need to request an EU bailout within six months unless it can count on lower borrowing costs and a broader recovery.
In a private note seen by the U.K.'s Daily Telegraph newspaper, Mediobanca's top analyst Antonio Guglielmi said "time is running out fast" for the euro zone's third biggest economy. "The Italian macro situation has not improved over the last quarter, rather the contrary. Some 160 large corporates in Italy are now in special crisis administration."
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Issing said that Mediobanca's warning was "another indication that Italy has also wasted time." "A lot of reforms have still to be done, in the labor market almost nothing has been changed so this is another indication that time is running out."
The European Central Bank has been criticized for not doing enough to help struggling euro zone countries and, on Monday, the Basel-based Bank for International Settlements (BIS) said that central banks might have bought economies time since the financial crisis, but had "retarded" economic recovery with ultra-loose monetary policy.
Meanwhile, the current ECB President Mario Draghi and the bank's former head Jean-Claude Trichet, said that the bank's firepower is - and should be - limited.
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"If [central banks] do too much, then they are only paving the way for the other partners, the governments, the parliament and the private sector, not to do their own job," Trichet told CNBC on Monday. "What counts now is really that the structural reforms are made in all major advanced economies, certainly in Europe. That there is the appropriate correction of the fiscal imbalances and a continuing repair of the private sector's balance sheets. This is work in progress, but has to be checked permanently and very, very carefully," Trichet said.
"The problem of course is that we hoped that the progress would have been made more rapidly, more swiftly and more energetically."
Issing agreed that the ECB shouldn't be seen as a panacea for the euro zone's problems and that there was a limit to what the central bank could do.
"I think that this is a very bad situation, if the central bank is seen as the only institution which can act or has the 'big bazooka' printing money - this is not the solution to the euro zone's problems," Issing said. "Monetary policy can only solve problems which are caused in the monetary field, and most issues which ask for reform are far besides what monetary policy can achieve," he said.
Despite Issing's warning to the euro zone, however, he said that the increase in government borrowing costs for Greece, Italy and Spain, were related to the Federal Reserve's plans to taper its bond buying program, rather than the euro zone's lack of progress in reforms.
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"I think this has had to happen and is not related to the euro zone crisis. It's related to the question of when the period of zero interest rates will end. But one day it has to end and it might be an abrupt change and markets are waiting for that and fearing that. Depending on how it is managed we might see some turbulence in markets to come."
- By CNBC's Holly Ellyatt, follow her on Twitter