Mundell Says Greek Exit From Euro Worse Option Than Staying
Greece’s exit from the euro area would be worse than staying in it, said Robert Mundell, a Nobel- prize winning economist and professor of economics at Columbia University in New York. He spoke today at a conference in Belgrade organized by the Italy’s Intesa Sanpaolo SpA. (ISP)
On Greek situation:
“Greece is never going to repay its debts.”
“Greece can go” from the currency union “but the euro will not collapse.”
The euro-area crisis of “over-indebtedness” requires a “division between countries that are insolvent and those that are illiquid.” The European Union should take steps “toward deeper fiscal integration.”
On pegging the dollar and the euro:
“The solution” to the global crisis “is to fix the dollar-euro exchange rate and add the Chinese yuan to the fix. This would fix the exchange rate of 50 percent of GDP. This kind of an idea of stabilizing the dollar and the euro can stabilize the world economy.
‘‘If you want to stabilize the exchange rate, you also have to coordinate monetary policy and you have to bring in China to it. I think China will be willing to do it. The problem is getting Americans and Europeans together.’’
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