The problem in Croatia is that people took loans tied to a foreign currency, particularly to the Swiss franc, and changes to interest rates have led to problems in repayments. In those circumstances, it seems that it would be wise to limit loans tied to foreign currencies either through tax policies or through regulations, Stiglitz told a press conference in Split where he was attending the international conference "Challenges of Europe."
Stiglitz wondered what could be done about such loans that had already been taken.
It seems that those loans were not properly explained to people taking them, which could lead to the question of whether those loans were predatory and should perhaps be converted to the Croatian currency, said Stiglitz.
Asked by reporters what the government needs to do to pull the country out of the crisis, Stiglitz said that Croatia's problems were part of the overall problem facing the European Union and that from the very start of the crisis the EU had not taken a good approach, with two critical points.
The euro was a political project, European policy was not strong enough to create its own currency that would be sufficiently sustainable. In addition, the central bank was inclined towards inflation and not employment and growth, he underscored. What Croatia needs to do is to change Europe. Good luck, Stiglitz said.
He criticised Germany for the situation in Europe, adding that this was relevant for Croatia because if other countries in the region were not doing well, it was reflected on Croatia too.
He underscored that in those countries where austerity measures had been implemented, those measures had resulted in a recession, while in those countries where austerity was milder, living standards were better.
Economic policies which are being conducted by Germany and which are also promoted here are wrong because Germany's surplus is causing an imbalance in the rest of the world, he said.
Stiglitz believes that the main reason for the eurozone not succeeding is the lack of a banking union, of an integral fiscal system and of an industrial policy system that would enable less developed countries to progress.