The European Central Bank has the ability to do more to tackle to the euro zone’s debt crisis than it has been doing, Nobel Laureate and Professor at Columbia University Joseph Stiglitz told CNBC’s “Worldwide Exchange” Friday.
“The ECB has the tools to do more than it has been doing. European governments have the first obligation but in the absence of that the ECB has the ability to do a lot more than it had been doing,” Stiglitz said.
Stiglitz won the Nobel prize for economics in 2001.
Europe’s debt crisis has been stoked to new crisis levels in recent weeks as an indecisive Greek election last month led to the need for new elections on June 17. Opinion polls have see-sawed between showing leads for the pro-bailout parties and those that have called for the bailout agreement to be ripped up.
Spain has become the latest problem child of the bloc as its banking system comes under renewed pressure and government borrowing costs near the crucial 7 percent level, prompting suggestions the country is on the verge of a bailout.
Stiglitz said it was difficult to ascertain the full impact that a Greek exitwould have on the global economy.
“We don’t know the full impact of a Greek exit and we don’t know the full financial (picture). When Greece restructured its debt there was no trauma (but) this would be a bigger event and so it could have a more traumatic effect,” he said.
He added that he was concerned about high unemployment and the lack of sustained economic growth across the euro zone.
“I am worried about high unemployment and that it will be persistent. GDP has not yet recovered to 2008 levels and in my mind, will there be enough robust growth to get unemployment down? I don’t see that (happening) in Europe or the U.S. anytime soon,” he said.
Euro zone unemployment stands at a 17-year high of 11 percent.