How to capitalise euro-zone banks

The economic literature confirms that well-capitalised banks result in a faster economic recovery. (1) The euro zone faced this very problem after the subprime crisis. How can banks’ capital losses due to the current rise in corporate bankruptcies be prevented from slowing the euro zone’s economic recovery? We could imagine : ESM investments in banks’ capital; Purchases by the ECB or a public bond fund of risky assets from banks to reduce their capital requirements. M. Schularik, S. Steffen, T. Tröger “Bank Capital and the European Recovery from the COVID-19 Crisis” CEPR Discussion Paper, No. 14927, June 2020