Europe should not hesitate to recapitalize its commercial banks if required, German Chancellor Angela Merkel said on Thursday.

Merkel made the statement after a meeting in Berlin with heads of the International Monetary Fund (IMF), the World Bank and the Organization for Economic Cooperation and Development (OECD).

She said national governments would intervene when needed to help commercial banks stay afloat, adding that the European Financial Stability Facility (EFSF), the EU's stopgap bailout fund, could also be used as a last resort.

"I would like to recall that the EFSF is a facility which serves to provide assistance at a point in time when a country (in trouble) would threaten the stability of the euro and the eurozone as a whole," Merkel said.

The German Chancellor had said earlier on Wednesday that pumping cash to banks was a "justified" approach in financial markets, after France and Belgium agreed to provide aid to Dexia, the first European bank dragged down by the lingering eurozone debt crisis.

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