JP Morgan warns against letting EU countries become insolvent

In an interview with Italy's Il Sole 24 Ore, the leading investment banker said that if a European state became insolvent and there was a default on its debt, Europe would find itself having to save the banks holding that country's bonds.

"I don't think that's the way to go," Mr Dimon said.

He said if a European state was allowed to default on its debt "the situation would precipitate triggering a whole chain of events".

The Maastricht Treaty had not worked and its criteria needed changing, Mr Dimon said.

On the idea of taxing banks for triggering the financial crisis, he said indiscriminate taxes do not work. "Only those that made a mistake should be punished," he added.

He said the new taxes introduced in the UK were a good example of his point. "They are indiscriminate and so not fair."

Mr Dimon said banks that have made mistakes should be allowed to go bankrupt.

He said he agreed with higher capital requirements for banks and liquidity standards.

"But we are now running the risk of excessive regulation and creating confusion and duplicating many norms," he said.

Like its peers, JPMorgan is facing changes to its business after US financial reform passed in the summer. There are worries that regulatory changes will trim some of the bank's most profitable businesses.