"It is not enough to just take writedowns on bank balance sheets," Blessing told the paper in an interview published on Friday, adding that Greece could not be helped and markets could not be calmed without real restructuring of Greek debt.
When asked whether banks would voluntarily contribute to resolving the issue, he said, "It would only be on a voluntary basis if Greece declared itself insolvent."
"If the Troika makes sure that the next tranche is not paid, this (Greek insolvency) will be possible. Voluntarily foregoing (payments on bonds) without insolvency is poison for the credibility of government bonds of other countries as well."
In July, banks and insurers agreed to contribute 50 billion euros ($68.5 billion) to reducing Greece's debt via a debt buyback and swap agreement, which equated to a 21 percent writedown. That is now seen as insufficient to make Athens' debts sustainable.
Blessing said banks will probably need more capital to weather an insolvency of Greece and called for governments to make clear rules for all banks quickly that create a level playing field and avert harm to the economy.
He said giving banks 18 months' time to reach a certain capital ratio would cause banks to cut back on business, making it more difficult for companies to obtain loans.
"Also, everyone would try to sell their government bonds rather than trying to gain more capital. That would just worsen the crisis."
** For the latest news on Europe's debt crisis, see ($1 = 0.730 Euros)