Market underpricing risk in post-Brexit world, says Nobel-winner Joseph Stiglitz

Market underpricing risk in post-Brexit world, says Nobel-winner Joseph Stiglitz: "The EU made a mistake by prioritizing the formation of a currency union over democratizing decision-making and forging a stronger European Parliament to balance the power of the bureaucracy, he said. As a result, he added, the EU is seen as little more than a bureaucracy.
Stiglitz said he is pessimistic European leaders can summon the political will to take relatively simple economic steps to save the euro, such as a creating banking union and coordinating fiscal policy.

In his view, one alternative to a divorce is a "flexible euro" that would bind smaller regions of Europe with more similar economic growth rates into smaller currency unions. That could result in the adoption of a northern and southern euro, he said.

In that scenario, the greater European Union could revisit the idea of a broader currency union if the requisite institutions develop and if exchange rates between the multiple euros converge, he said."



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