Euro Strength Seen by Stiglitz Removing Greek Debt

Rather than a euro failure, an orderly Greek exit from the currency has Nobel laureate Joseph Stiglitz and Nomura Holdings Inc. chief strategist Jens Nordvig predicting a stronger and more stable monetary union.

While Societe Generale SA suggests that the euro might break up because of the cost of Greece’s departure, the nation accounts for just 2.3 percent of the 17-nation trading bloc’s gross domestic product. It also has 356 billion euros ($450 billion), or 4.3 percent of the region’s total debt, according to data compiled by Bloomberg. The area’s trade deficit last year would have been a surplus without its weakest member, according to European Union data.

Foreign-exchange markets display little evidence of the euro being dismembered. The currency trades 53 percent above its record low of 82.30 U.S. cents in October 2000. Bond yields of Austria, Belgium, Finland, France, Germany and the Netherlands have fallen to record lows, as investor demand for their debt increases. Removing Greece from the euro would reduce the bloc’s debt-to-GDP ratio to 85.5 percent from 87.3 percent.