Indeed, Turkey did not have to spend a penny of taxpayers money on bank recapitalization or rehabilitation during the global financial crisis.

Debt equity swaps would be a much better way to recapitalize the banks.

So, what needs to be done? First, eurozone banks have to be recapitalized.

The eurozone needs a banking union a European deposit insurance scheme in order to stem capital flight, a European source for financing bank recapitalization, and eurozone wide supervision and regulation.

What is now proposed is recapitalization of the European Investment Bank, part of a growth package of some 150 billion.

Capitalization of research and development expenditure

All of this requires financing bank recapitalization alone could require hundreds of billions of euros (though these needs would be mitigated somewhat if the sovereign debt of large eurozone countries looked healthier).

Clearly, some of the EFSF funds will have to go to recapitalize banks that cannot raise money from the markets.

But even HSBC, the best capitalized of the lot, has a leverage ratio of only 4.6 , while Barclays ratio is under 3 .

Recapitalization of banks that appeared very vulnerable

Second, China can participate in bank recapitalization in Europe.

Recapitalization has not yet reached the point where there are enough strong banks.

Coercive restructuring of insolvent banks unsecured debt would be next.

Government debt must be restructured. Bank debts have to be converted into equity and, where banks are insolvent, written off.

Banks incurring balance sheet damage will have to be recapitalized.

Losses that eurozone banks would suffer would be manageable if the banks were properly and aggressively recapitalized.

To enforce the statute, regulators periodically examine banks for CRA compliance.

This has triggered a search for a radical redefinition of central banks objectives and has cast doubt on the appropriateness of maintaining their independence.

Above all, the G 20 s decision to prop up systemically relevant banks must be revisited.

Finally, banks that take losses as a result of these restructurings will need to have their balance sheets reinforced.

Because government provides deposit insurance, it plays a large role in restructuring (unlike other sectors). Normally, when a bank fails, the government engineers a financial restructuring if it has to put in money, it, of course, gains a stake in the future.

And this leaves out government spending that may be needed for further recapitalization of Greek banks.

Restoring financial market confidence has had to rely on liquidity injections by major central banks.

Even the recapitalization of banks through state assistance has not been enough to revive economic activity.

This new prominence has also forced some central bankers to reassess their decision making processes.

One consequence of the ECB s large scale long term refinancing operation (LTRO) has been that Italian banks are once again buying Italian government bonds, and Spanish banks are buying Spanish bonds.

The purpose of the ECB s measures was to re establish confidence and bring about a recovery of the inter bank market.

Investment banks then earn fees for re packaging these securities in tranches of collateralized debt obligations, or CDO s (and sometimes into CDO s of CDO s).

Greek banks would need to be recapitalized, but then they could make new loans again.

Following that, the restructured bank can be recapitalized by raising new debt and equity.

None of this means that banks should be granted a regulatory holiday and forget the need to recapitalize.

In a few years time, the banks will be recapitalized, and the economy will return to normal.

Like banks, all these financial institutions are subject to liquidity or rollover risk the risk of going belly up if their creditors do not rollover their short term credit lines. But, unlike banks, they do not have the safety net implied by central banks role as lender of last resort.

Investment The stock market capitalisation of listed companies in Bahrain was valued at 21,176 million in 2008 by the World Bank.

Likewise, French banks holding Greek bonds cling to whatever thin reed of optimism they can and lobby furiously against restructuring.

The key to this proposal is that banks must agree it is a voluntary debt restructuring, compelled by no legal authority.

As a result, the banks have been focused on returning the bailout funds at the earliest opportunity, rather than using them to boost lending.

Not proceeding now with bank recapitalization and government bond purchases would similarly lead to disaster.

This was a profitable model when Spanish banks were able to refinance themselves at a spread much lower than 100 basis points.

That means more debt restructuring and more bank closures now, rather than watering down proposals to rein in freewheeling markets.

In post communist Europe, banks had to be built from scratch out of the rubble of socialism.

If creditor banks were unwilling to accept some form of restructuring, they would have to put in new money.

The study finds that CRA lending by larger banks does indeed respond more to a CRA examination.

Like banks, all these financial institutions are subject to liquidity or rollover risk the risk of going belly up if their creditors do not rollover their short term credit lines.

The Bundesbank has stated that it will no longer accept bank securities as collateral from banks that have undergone a government recapitalization.