Austerity is not the only thing being forced on eurozone governments by the sovereign debt crisis. They must also shore up confidence in the banking sector. In the wake of the Greek crisis, the share prices of banks have fallen while the cost of insuring their debt has doubled over the past month.

The market's aversion to banking risk is perhaps indiscriminate. Many European banks are in reasonable health. But there are areas of weakness – especially in Spain and Germany. And these must be addressed if they are not to taint the wider market.

Europe has not been noticeably slower than the US in pursuing banking reform. But in one sphere most of Europe has lagged behind: that of crystallising losses and recapitalising weaker institutions.