"In terms of flight to quality, no, I must tell you that we are not experiencing in our country anything like that," Passera said.
European lenders are also moving money out of the region. The cash that foreign banks keep at the U.S. Federal Reserve has more than doubled to $979 billion at the end of August from $443 billion at the end of February, according to Fed data. The increase in bank deposits at the ECB has been smaller, suggesting that healthy European firms are putting money in the Fed instead of lending to weaker banks, according to economist Mansori, who also writes a blog called "Street Light."
Bank Lending
"Do you want to keep your money at the Fed, which you know will pay you back, or at the ECB, which has lots of periphery euro zone country debt?" said Mansori.
The reluctance of European banks to lend to one another has been on display since last month. The spread between Euribor and the overnight indexed swap rate, which reflects the higher risk of lending euros for three months versus overnight, widened to 0.85 percentage point on Sept. 13. The rate compares with 0.36 percentage point at the beginning of August.
Banks can't continue to rely on the ECB for funding because that's a sign of being on "life support," so they'll have to shrink their balance sheets, said KBW's Ramirez. That means reduced lending in countries where growth is stagnant.
Lending by banks in Ireland declined 9 percent in the past year, 3 percent in Greece and Italy and about 1 percent in Portugal and Spain, according to ECB data. Gross domestic product in Italy expanded 0.8 percent in the second quarter from a year ago and 0.7 percent in Spain. Greece's economy shrank 7.3 percent, while Portugal's contracted by 0.9 percent. Irish GDP growth was 0.1 percent in the first quarter, according to the latest data available.
Irish Cutbacks
Ireland said in March that its surviving banks would wind down more than 70 billion euros of loans. Most of the reduction will be lending to borrowers outside Ireland, which could hurt growth in other EU countries. Greek banks, unable to sell sovereign bonds they hold, will also have to trim their loan books, according to Ramirez.
"It'll aggravate the recession," he said.
While banks say higher capital requirements will curb lending and economic growth, it's the lack of capital in the European banking system that's spooking depositors and other creditors, said Lachman of the American Enterprise Institute. That's why the International Monetary Fund is pushing for recapitalization of the region's banks, he said.