Europe needs new legislation to help failed banks unwind as quickly as possible, according to Bank of Finland Governor Erkki Liikanen who is leading the EU advisory group on banking reform.
"The difference between normal companies and banks is that banks don't have time. Banks must be resolved very fast, " Liikanen told CNBC.
"For that reason we need new legislation in Europe, which means they can be resold, unwound, very fast."
Liikanen said that new legislation, combined with strong equity and capital buffers, is needed to ensure public money is not spent in future on propping up the banking sector.
"When a bank goes into a crisis, the first defense is with the shareholders, their equity. The second should be the debt holders, " he said.