* Rapid recovery at pre-crisis rates appears improbable
* Inflation seen slightly above 1 pct for next 2 years
* Banks should raise new funds on the market (Adds more comments)
MILAN, Dec 11 (Reuters) - There is a big uncertainty about the strength and sustainability of economic recovery in the months and years ahead, European Central Bank Executive Board member Lorenzo Bini Smaghi said on Friday.
"A rapid recovery in economic activity, at the rates registered before the crisis, appears improbable for various reasons," Bini Smaghi said in an article published in Italy's business daily Il Sole 24 Ore.
Growth in the run-up to the crisis was not sustainable and masked economic and financial imbalances, both at national and international levels, he said.
"To return rapidly to these rates of growth would be equally unsustainable," Bini Smaghi said in the article, which according to the newspaper was a synthesis of the policymaker's Dec. 1 speech at the Ambrosetti Club in Milan.
Euro zone growth, which resumed in the third quarter, was likely to be gradual and uneven, led mainly by exports, with only modest contribution from domestic consumption and investment, he said.
Reduced corporate and household borrowing, above all in the United States, should lift individual savings and constrain consumer spending, he said.
Inflation is expected to hold just above 1 percent over the next two years and inflation expectations were well-anchored in the medium-term, Bini Smaghi said.
Turning to banks and the ECB's strategy of gradual withdrawal of credit market support, Bini Smaghi said it was essential that banks prepared for the "new context," turning to markets to fund their long-term financing needs.
In the past months, corporate bond issues, particularly by large companies, have picked up strongly, while banks' bond issues have remained modest, he said.
If the banking system is not able to meet demand for new credit the recovery may be compromised, he said.
"To avoid such a scenario, the banking system should use the present phase of restructuring to strengthen their own capital base,", Bini Smaghi said.
He said the distribution of dividends by banks and bonuses for their employees was not a priority at this moment. (Editing by Tomasz Janowski)