Cash-strapped Greece should be allowed to leave the euro zone temporarily, the president of Germany’s influential Ifo Institute for Economic Research told CNBC on Thursday.
Talk that Greece is on the brink of a debt default that could trigger its exit from the euro zone has grown this week. A senior ruling party official said on Wednesday that Greece would be unable to make a payment to the International Monetary Fund on June 5 unless it received more aid from its creditors.
“Greece is insolvent… and we are delaying the process of declaring insolvency which would be illegal if it was a private company,” Ifo’s Hans Werner-Sinn told CNBC Europe’s “Squawk Box.”
“It is time for a big (debt) haircut and more radical measures to help Greece.”
Sinn, who has spoken in favour of a Greek exit from the euro zone in the past, said it was difficult to see how Greece could resolve its problems while remaining in the single currency bloc, but added that any exit — or “Grexit” — did not have to be permanent.