Op-ed: How to sidestep incomplete financial reform

Ruling out the bad bank strategy, the Spanish government is asking the financial sector to increase the amount of its provisions, which would initiate a new wave of mergers in hopes that reducing excess lenders could galvanize recovery in the sector.

However, this approach brings considerable risks. The biggest risk is Bankia's size. That is why this tailor-made solution is being considered for the titan lender. Bankia will be given a period of two to three years to gather sufficient deposits.

This time frame is adequate. Further, during the consolidation process, Bankia will dedicate its resources to assimilating other lenders, not providing credit to borrowers. We are not remembering what happened to Japan. Any effective cleanup of a financial crisis entails massive state-funded aid.