Europe is the biggest threat to the global economy, JP Morgan's chief executive Jamie Dimon told German newspaper Die Welt in its Sunday edition. "I thought Europe would muddle through. I still believe that," Dimon is quoted as telling the paper.
The US executive said he now thought there was a chance of over 60 percent that Europe could make it, and no longer a 90 percent chance, as he had previously believed.
"We urgently need a solution. The longer the problem drags on, the less likely it is we get off lightly," he told the paper.
"The longer the crisis drags on, the more intense the pressure from markets will get," Dimon said.
Dimon still thinks it is unlikely that the euro will break up completely but no longer rules out a Greek exit from the common currency.
"It could be that some countries like Greece, contrary to rational reason, opt out. This would be bad, but manageable," Dimon said.
To solve the crisis Euro zone countries need to implement credible austerity measures and the European Central Bank (ECB) needs to pledge liquidity support for countries like Spain and Italy indefinitely, Dimon said.
The fact that the ECB has pledged liquidity support for only a limited period of time is prolonging insecurity in the markets, Dimon said.
Insecurity on the markets is worse than in the aftermath of the Lehman crisis, Dimon told the paper.
In the worst case scenario J. P Morgan could see losses of about $5 billion on its $16-billion Southern Europe portfolio, Dimon said, adding the bank would not withdraw from the region.
However, the crisis forced the bank to re-evaluate all contracts with European partners. Because all banks and insurers are doing the same thing this could result in a "snowball" effect, he said.