Central Bank Governor Patrick Honohan has said that not allowing temporary or permanent bailout funds to directly recapitalise banks directly is a "missed opportunity".
Mr Honohan said that injections from the EU funding mechanisms to governments inflated debt, which led to concerns among rating agencies.
"Using pooled European funding mechanisms directly as a means of recapitalising weak banks and acting as a backstop for future problems is an obvious way of pooling risk and breaking the sovereign-bank linkage," Mr Honohan said in a speech in London.
"When I say directly, I mean without entailing a sovereign indebtedness," he said.
Eurozone officials knocked back press speculation that the ECB and a group of eurozone countries were working on a possible initiative to enable crisis-stricken banks to have direct access to Europe's permanent bailout fund.
The discussion stems from market concerns about the banking sector in Spain, where a sharp drop in real estate prices and a recession have triggered investor expectations that Spanish banks may need more money than previously thought to recapitalise.
EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters in an interview last month that there were no plans to use the permanent European Stability Mechanism (ESM) or the temporary European Financial Stability Facility (EFSF) to lend to recapitalise Spanish banks.
Mr Honohan said the €17bn injected into Ireland last year added some 13% of GNP to Ireland's debt.
"The EFSF could look forward to upside in the recovery by being the owner of two banks with a substantial national franchise," he added.
The Central Bank governor also highlighted the need for a European-level resolution agency to cover bondholders' claims in bank resolutions among members states.
