A failure by European regulators...

to make banks raise enough capital to withstand a sovereign default is complicating efforts to resolve Greece's debt crisis.

The "fragilities" of Europe's banking industry mean a Greek default isn't an option, European Union Economic and Monetary Affairs Commissioner Olli Rehn said in New York last week.

By delaying a decision some investors consider inevitable, policy makers risk increasing the cost to European taxpayers and prolonging Greece's economic pain