LONDON The euro will find it "very difficult" to survive without the implementation of a eurobond framework, Nobel Prize winning economist Joseph Stiglitz said on Monday.
Stiglitz, on the BBC's Newsnight programme, said the lack of fiscal room in the eurozone countries worst affected by the sovereign debt crisis will intensify the problem, unless a solution is found.
"Unless some framework like European bonds are promoted, it's going to be very difficult for the troubled eurozone countries to be able to meet their financial requirements."
Stiglitz, who won a Nobel Prize in economics in 2001, said eurobonds could be created with a limit and conditions attached to stop, what he described as, the failure of the present lending system.
"Right now Governments are borrowing from their individual banks and these bonds are being discounted by the ECB."
"In a way, eurobonds are already happening but in a very non-transparent way and with a lot of uncertainty about how the present system is going to continue.
The idea of so-called "Eurobonds" has been fiercely opposed by Berlin, which is fearful such a step would push up German borrowing costs and reduce incentives for weaker euro zone members like Greece to reform their economies.
Stiglitz said Germany would suffer "severe consequences" if troubled eurozone countries failed to repay their loans.
He added that it would be a more beneficial to the survival of the single currency if the Germans, rather than a troubled eurozone country, opted out of the euro.
"It would actually be better for the euro if Germany left because the consequences of restructuring debt if Greece, Portugal or Ireland were to leave would be very great."
"If Europe decides that the only way it's going to continue is through some stabilization or solidarity fund in the form of eurobonds, which Germany doesn't want, than it will be Germany that has to leave," he added.
(Reporting by Stephen Mangan; Editing by Kim COghill)