Bank recapitalisation 'doesn't solve liquidity problem'

An economics professor has said recapitalisation of the banks "does not solve the problem of liquidity".

Professor Antoin Murphy from Trinity College Dublin said he hopes people will have trust again in Ireland's banking system once it is restructured.

A number of commentators have said the four-year plan will not sort out Ireland's finances, because they believe the country's real problem is the banking crisis.

However, Professor Murphy said: "It is a good proposal."

On the banks, he said recapitalisation gives confidence to the system, but it "doesn't solve the problem of liquidity" and people need to trust the banks enough to put their money in.