Leading banking regulators in the European Union has claimed that some of the eurozone's banks have no future and should be allowed to go under if they fail.
Daniele Nouy, the eurozone's new banking supervisor, revealed that banks failing the European Central Bank's (ECB's) assessments could be wound down.
She told the Financial Times: “We have to accept that some banks have no future. We have to let some disappear in an orderly fashion, and not necessarily try to merge them with other institutions.”
Ms Nouy also indicated plans to weaken the links between governments and banks within the eurozone by demanding that banks hold capital even against sovereign bonds.
“One of the lessons of the current crisis is that there are no risk-free assets, so sovereigns are not risk-free assets," she concluded.
Her views are aligned with ECB President Mario Draghi, who said in a speech at Davos in January, that banks found to be unviable by the asset quality review and stress tests this year should be shut down.
By Claire Archer