EU should restructure Greek debt, ECB cut rates-Roubini

European policymakers should abandon current efforts to help Greece and move to a plan B including debt restructuring and interest rate cuts, U.S. economist Nouriel Roubini said.

In an opinion piece in the Financial Times, Roubini and co-author Arnab Das, head of market research at Roubini Global Economics, said forcing deep budget cuts in Greece would have knock-on effects and risk a disorderly default.

"Much time has been lost in denial but if the following steps are taken it might not be too late to avoid a disorderly outcome," they wrote.

Plan B should include restructuring debt, a fiscal adjustment plan for the euro zone periphery, a larger aid package from the European Union and International Monetary Fund, rate cuts, demand stimulus in Germany and a coordinated effort to correct institutional weaknesses.

"The (European Central Bank) must be on-side with refinancing to forestall a run on Greek banks; easy monetary policy to weaken the euro, thus helping to restore competitiveness and prevent deflation; and liquidity facilities for overexposed third-country banks," they said.