Sarkozy's visit was a reminder that the solution to the financial crisis, when it comes, will be a global one.

Even if Germany decides to support the Greek bailout, the time has come to address the fundamental issues involved in the Western financial crisis, namely excessive national and bank debt, uncompetitive Euro economies and undercapitalized Western banks.

The US economy remains the world's largest, by a big margin. The collapse of its housing market continues to undermine US consumer confidence and bank balance sheets, diminishing the prospects of a quick global economic recovery.

Key structural problems at the global level, which will take longer to address, include a monetary system based on the US dollar, which no longer provides financial stability, and an unbalanced world economy.

These are large issues that require a high degree of political determination and unification, the kind which was briefly seen immediately after October 2008, the beginning of the global financial crisis.

Unity dissipated as central banks flooded the financial system with cash, and disaster retreated.

But what we know now is that the monetary response of 2008 and 2009, while essential to restoring life to the system, was not a substitute for fundamental restructuring.

When Bernanke failed to announce another round of monetary injection also known as the third quantitative easing, or QE3 he acknowledged the limitations of central banks in addressing the underlying issues. Only ministers and politicians can do that. At the top of the list should be the restructuring and re-capitalization of Western banks.

Some of this has already happened in the US. But with the housing market's continued weakness, more needs to be done.

Warren Buffett's recent $5 billion (3.5 billion euros) investment in Bank of America is only a start. In Europe, the merger of two major Greek banks -Alphabank and Eurobank EFG - plus an injection from Qatar of 500 million euros into the restructured bank should be the precursor to other Euro bank restructurings.

Analysts at Credit Suisse recently estimated that 45 billion euros in capital is needed for the European banking system. Some of this capital is required to write off the massive amounts of bad loans that threaten the Western banking system.

The remainder is needed to increase the capacity of banks to withstand continued adverse economic conditions, and to allow resumed financing of industry and commerce, on which renewed economic growth depends.

In some cases, the restructuring of bank management will need to change. The fear of job losses at a senior level is keeping some banks from coming clean about their underlying balance sheet problems.

Today, the world's weakened financial state doesn't allow it the scope to respond as it did in 2008 to financially life-threatening events.

If the system crashes again, the possibility exists of major Western banks closing their doors, with large disruptions to trade and other industrial and commercial activity worldwide.

Britain's August riots provide a taste of the possible social consequences of a severe financial breakdown. Small, open economies that depend heavily on trade and capital flows would be particularly affected by a global economic upheaval.

The failure of the Greek rescue plan is one possible tipping-point; another could come later in the year when the European Central Bank finds itself unable to buy any more Italian and Spanish debt.

The author is visiting professor at the Guanghua School of Business, Peking University. The opinions expressed in the article do not necessarily reflect those of China Daily.