Jeremy Warner: Europe's banks still need plenty of medication

Outlook: Economic recovery is being hampered by lack of confidence in the eurozone banking system

If we seem to be past the worse for the British and American banking systems, the same cannot be said for continental Europe, where according to the European Central Bank, eurozone banks are facing a further $283bn of additional losses this year.



As the ECB now itself acknowledges, economic recovery is being severely hampered by lack of confidence in the eurozone banking system. Britain and America has found that systematic stress testing of banks by the authorities have worked wonders in drawing a line under the crisis so that confidence can be restored. This has yet to happen in Europe on any kind of credible level.

The ECB cannot formally conduct such tests itself, since only nations can provide the bailouts these tests may make necessary, but it can co-ordinate them so that common standards are applied. This process must now begin as a matter of urgency.

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