Furthermore the systemic nature of the crisis and the fact that it has occurred in countries whose banking systems are large in relation to the economy’s fiscal capacity has entangled the financial stress of the banks and that of the sovereign, not least because of the reluctance of public authorities in most advanced economies in these years to see sizable losses imposed on bank creditors – only Iceland has imposed any losses on senior bank creditors (of sizable banks) since September 2008.1 Decisions on recapitalisation are needed along three main axes.
(a)  Transparency: should the basis of capital adequacy calculations be disclosed and crystallised promptly and extensively to the market or is there a case for delay and opacity? (b)  Depth: should the recapitalisation be over-sized, or “just enough” to meet regulatory minima?