Governments have more to do to pull banks off state support, a European Central Bank policymaker said this afternoon while another warned that emergency cash supplies would not last forever.
ECB Governing Council member Ewald Nowotny told reporters that government action was needed to wean banks off the cheap cash the ECB has provided since late 2008.
That added to an impression that the fate of some euro zone banks - particularly in Ireland and Portugal - is now back at the forefront of investors' and policymakers' concerns, even after the agreeing of new stricter rules on capital last week.
Axel Weber, the head of Germany's Bundesbank and another ECB council member, said there was still work to be done on making sure no banks were so big they could not be allowed to fail in future and said regulation would have to reviewed regularly.
"The financial crisis is still with us. We are not in year one after the crisis, we are in year four of the crisis," Weber said in a speech at the European Business School.
"Moral hazard is present in the financial system ... I want to get to a situation where the term 'too big to fail' does not exist.
Banks have to be able to fail, but it must be able to happen in an orderly way."
Another ECB policymaker, Yves Mersch, was quoted as telling Frankfurter Allgemeine Zeitung that the ECB would tread carefully in removing support, but banks should not count on unlimited cash for ever.
"We are implementing our exit cautiously and are accompanying the normalisation in individual market segments," he told the newspaper. "However, the peak of non-conventional measures is now definitely behind us."
"I see no need to hold onto full allotment (of funds at central bank auctions) in the 'new normality'. Short-term rates can be very easily controlled via competitive tenders."
And Mr Nowotny said: "There is an obvious problem of so-called addicted banks. This is a problem that has to be solved primarily by the governments."
Ireland has faced increased borrowing costs over recent weeks following a downgrade and uncertainty over the cost of the bailout required for Anglo Irish Bank.
The Department of Finance and the International Monetary Fund sought to calm markets today after a newspaper report on the possibility of a bailout spooked investors. Both said the report was an erroneous interpretation of a research report from Barclays.
Although markets are pricing in an eventual sovereign default by Greece, "a sovereign default in the euro zone will not happen ... A lot of money has been put on the table (by governments) but it comes with strong conditionality," Mr Weber said.
"Greece has to stay an absolute exception," he added, referring to the European Union/International Monetary Fund aid package Greece received to solve its debt problems, which were covered up until late last year.
Reuters