But an insurance scheme would be even more effective under present circumstances than additional capital in restoring market confidence in both the banks, enabling them to access wholesale term funding at reasonable cost, and it would also lower the risks perceived by lenders to the State.
Unfortunately neither the IMF nor the EU facilities are able to offer insurance of this type: they are simply lenders. This is a pity, because the wider EU and the global community has a better capacity to bear tail risks than does a single State.