The eurozone needs major reform and structural overhaul, but changes shouldn't resort to boosting liquidity to ease credit conditions, known as easing, says Kenneth Rogoff, a Harvard University professor and former chief economist of the International Monetary Fund.
While the European Central Bank has not stepped in and snapped up assets from banks with freshly printed money as the Fed has done to stimulate its economy, it has undertaken similar measures by providing banks with cheap, three-year loans.
"They're printing money but that doesn’t work," Rogoff says, according to CNBC.
"I think they’re printing money and buying time and that can work for a while although it leads to an uglier end-game."
The three-year loans have eased credit conditions somewhat, but more is needed, Rogoff says.
"They are so far from having a solution in Europe. They need a new constitution. They need deep restructuring. This is not just about Greece. It’s way deeper than that," Rogoff says.
Turning to the U.S., Rogoff says the world's largest economy was doing better than in 2011 but is still not out of the woods.
"The U.S. has some positive growth," Rogoff says.
"That’s not enough to help the employment a lot but it’s a lot better than where Europe is."
The U.S. Federal Reserve has purchased $2.3 trillion in assets via quantitative easing, while ECB officials insist the bank's mandate prevents them from carrying out similar measures.
Some ECB officials say the European economy is starting to recover organically and doesn't need a shot in the arm via easing, pointing out that investors are growing more confident in the continent's future.
"My impression is that, since December, the market psychology has begun to change," says ECB Executive Board member Jose Manuel Gonzalez-Paramo, according to Bloomberg.
"Pieces are falling into place, not just for a single country but for the eurozone as a whole."
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