Europe needs to allow for bankruptcy within its borders and keeping Greece in the euro zone could be riskier than letting it go, the president of the influential Ifo Institute for Economic Research in Germany, Hans Werner-Sinn, told CNBC Monday.

The head of the Munich-based IFO Institute for Economic Research has accused the E.U. of meddling with the figures for Greece's finances to portray a rosier picture ahead of EU elections.