German banks should be more aggressive in using funds provided by a €500 billion government rescue package, European Central Bank executive board member Juergen Stark said today.
Speaking at a BMW Foundation event in Berlin, Mr Stark said there was an urgent need for banks to recapitalise to prevent a credit crunch and support the real economy.
"In this situation it is urgent and necessary that the banks make as much use as possible of what the state has offered," he said.
It is understood around a dozen German financial institutions have applied for government help since the package was unveiled last month.
Germany's second-largest lender Commerzbank and troubled property financier Hypo Real Estate, as well as some of Germany's state-owned landesbanks, have announced their intention to tap the fund.
The chief executive Germany's largest lender Deutsche Bank was quoted today as saying it would not need money from the state to survive the financial crisis.
Mr Stark said he hoped the worst of the crisis had passed, but predicted that Europe would face a period of economic weakness that is likely to last through much of 2009.
Data released yesterday showed the 15-nation euro zone economy shrank by 0.2 per cent in the third quarter of this year, meaning the euro zone is in recession for the first time since its creation in 1999.
Mr Stark also warned world leaders meeting in Washington against quick steps to reform the global financial system, saying they should take their time to explore the underlying reasons for the current crisis.
Reuters