Monday's report by the Washington-based fund said consolidation and reform of the banking system needed to be accelerated and also called for the government's proposed pension reforms to be "quickly adopted".

European stock markets and the euro fell in afternoon trading as the continent's debt crisis intensified following this weekend's Spanish bailout of a troubled financial firm.

The rescue of CajaSur, a regional savings bank which has been taken over by the Bank of Spain, could cost up to $3.4bn, a Spanish newspaper reported.