Radical steps to stem crisis warranted: Verheugen

"If you allow one institution after another to collapse, the entire economy crumbles. There is no alternative to state action," Verheugen told the Wednesday edition of the Hannoversche Allgemeine Zeitung daily.

"I would not shy away from very unconventional steps, even if it means short-term nationalisations in order to prevent a collapse. This would be a better result than a blaze that is out of control."

The comments from Verheugen, who in the past has often opposed state interference in the economy, reflect the broad shift in policy that has swept through Europe since the financial crisis began rattling banks in the bloc.

Verheugen voiced support for Berlin's efforts to reassure the population by guaranteeing private savings deposits, saying the goal was to prevent a deep crisis of confidence.