FLORENCE, Italy, Jan 22 (Reuters) - Europe should take coordinated action to put strong pressure on banks to accept public funds to recapitalise themselves, European Central Bank Executive Board Member Lorenzo Bini Smaghi on Thursday.
Speaking at an event at Florence University, Bini Smaghi noted that few banks had initially accepted public funds to increase their capital ratios.
He suggested this may be because managers feared their salaries may be cut or because seeking public help might be interpreted as a sign that the bank had been badly managed.
"Instead we have to push banks to recapitalise, make it almost obligatory with a coordinated process, because with banks that are not sufficiently capitalised, large losses create large doubts that the system can hold up," Bini Smaghi said.
These doubts lay behind big stock market losses like those of last week, Bini Smaghi said.
"It's not enough to make a good law, you have to see how it is interpreted by those it affects," he said. (Writing by Gavin Jones; Editing by James Dalgleish); gavin.jones@thomsonreuters.com; Tel: +39-06-8522-4232))