Germany should leave euro zone: Mervyn King

Mervyn King on making banks safer

Germany has grown too powerful and should leave the euro zone in order to save the union, former Bank of England Governor Mervyn King said Monday.

"That would be the best way forward, and I would hope that many of my American friends would stop pushing the Europeans to throw money at the problem and say we must make the euro successful," he told CNBC's "Squawk Box."

The tragedy of the euro zone, said King, is that Germany entered the project in a bid to bind itself into Europe so that no European country would ever again fear the country's power. But now Germany is more powerful economically and politically than it was when the euro was adopted, he said.

Germany also sacrificed the Deutsche mark in the process, "the one really successful symbol of post-war German reconstruction," he said.

While the United States, the U.K., and some European countries need to export and invest more while consuming less, Germany and China need to spend more and export less, King said.

"Unless we're prepared to tackle that problem head-on, which will involve some restructuring of the economy, then we shall just continue down this path of ever-lower rates and no growth," he said.

Last week, European Central Bank President Mario Draghi warned European leaders that monetary policy alone would not be enough to jump-start the economy and that governments needed to do their job by pushing through structural reforms.

"I made clear that even though monetary policy has been really the only policy driving the recovery in the last few years, it cannot address some basic structural weaknesses of the euro zone economy," Draghi told reporters.

European Central Bank President (ECB) Mario Draghi speaks at the press conference following the meeting of the Governing Council of the ECB on 10 March 2016 at its premises in Frankfurt, Germany.
Draghi tells EU leaders he can't fix the economy on his own

European leaders will discuss further integration of the economies and policymaking of the 19 countries sharing the euro at a summit in June.

Lower consumer spending in the United States would only produce lower GDP growth in the very short run, in King's view.

It was necessary for industrialized economies to cut interest rates, launch fiscal stimulus, and persuade people to spend more in the wake of the financial crisis, but those measures were like painkillers, he said.

"A good doctor always believes the painkiller can mask the ultimate problem, and you have to diagnose it and put in place the right prescription for the longer-term recovery to health," he said.

— Reuters contributed to this story.