The EU executive is proposing \"coordinated action\" by the 27 European Union states to recapitalise banks, with efforts already under way, European Commission head Jose Manuel Barroso said on Thursday. \"We are now proposing to the member states to have a coordinated action to recapitalise banks and get rid of toxic assets they may have,\" Barroso said in an interview with Euronews TV. \"We are determined to do everything necessary to ensure that Europe\'s banks are able to play their essential role,\" the Commission president said later in a separate statement. \"Recapitalisation efforts are well underway, additional efforts may be needed. Coordination at European level is of course essential,\" he said at a short news conference held with visiting Finnish Prime Minister Jyrki Katainen. The European Commission, which runs day-to-day EU business, was monitoring the situation on a daily basis in collaboration with the European Banking Authority and national supervisors, Barroso said. He admitted \"the situation in the market has changed\" since the summer when only nine of scores of European banks failed stress tests. Another 16 just scraped through. But he did not answer questions on the proposed elimination of toxic assets and refused comment on the IMF\'s suggestion that 100 to 200 billion euros are needed to recapitalise stretched banks. The comments come the same week France and Belgium were forced to leap to the rescue of Dexia, the first European bank to be dragged down by the eurozone debt crisis -- and which also had to be rescued in 2008. The debt crisis that began in Greece, snaring Ireland and Portugal on the way and now threatens Italy and Spain, is putting at risk the whole euro project as banks exposed to sovereign debt find it impossible to raise funding. The resulting \"credit crunch\" has sparked warnings of a possible replay of 2008 when US investment bank Lehman Brothers collapsed, almost taking the global financial system down with it, but for massive government support. \"Now because of the real mess where we are there is a good will to accept that we manage this collectively,\" Barroso said earlier in the TV interview. Asked to comment on how EU authorities had allowed the sovereign debt crisis to get out of hand, Barroso said: \"In fact the European Commission has always warned about the high levels of debt in our member states.\" But \"probably not so vigorously as we should,\" he admitted. \"Unfortunately at that time we did not have all the instruments we are going to have now,\" he added, referring to a new package of laws adopted this week to drastically tighten fiscal and budgetary discipline. Member states had finally accepted that euro-officials pore over national account books, Barroso said. \"Greece and other countries that are living above their means have now to make some painful adjustments and that\'s unavoidable,\" the head of the EU executive added. On Wednesday, German Chancellor Angela Merkel called on her EU partners to recapitalise the banking sector to help prevent the eurozone debt crisis spreading. Merkel said helping the banks was \"justified, if we have a joint approach,\" giving nervous financial markets an immediate boost after days of heavy losses on fears the banking sector needs help urgently. It \"is important for the markets that we achieve results... time is pressing and we have to act quickly,\" she said. Official data in Frankfurt Thursday showed eurozone banks continued to deposit large amounts of overnight funds at the European Central Bank, a signal that banks are wary of lending to each other.