Shaky banks, this time in Italy, are again threatening to disrupt Europe's economy, as shock waves from Britain's vote to leave the European Union send their shares plunging.

Prime Minister Matteo Renzi is looking for a way to rescue banks from a pile of bad loans that aren't being repaid.

A rescue attempt using public money could run into resistance from the EU, which has worked hard to agree on new rules aimed at protecting taxpayers from such bailouts. Rescuing banks has overwhelmed the public finances of entire countries in recent years, like Ireland in 2010.

Banks are also under pressure across Europe from low interest rates, which hurt their earnings. The issue is important because if the banks are struggling, they can't make loans — the lifeblood of the economy that helps people buy homes and companies invest in new business.

Here's a guide to Europe's banking crunch, and why it matters.

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THE ITALIAN JOB

A key index for Italian banks has fallen 30 percent since the British EU referendum on June 23, and 61 percent in the past year.

The banks have been worn down by some 360 billion euros ($400 billion) in loans that won't be paid back in full, as well as low interest rates, which squeeze the difference between bank borrowing costs and lending rates — their fundamental way of making money.

Market turmoil unleashed by the British vote helped underscore existing worries about the banks. Any slowdown in trade with Britain would only increase the bad loan problem.

The government has launched a privately backed fund called Atlante to buy soured loans and help banks' finances with private money. But analysts say Atlante, which contained less than 5 billion euros as of April, may not help much.

The country's third-largest lender, Banca Monte dei Paschi di Siena, has been ordered by the European Central Bank to sharply reduce its load of bad loans, and has until October to come up with a plan to do that. The bank has already tapped investors several times for more money. Its shares have plunged to 0.28 euro cents year from 1.28 euros at the start of the year.

Italy last year already rescued four small banks accounting for about 1 percent of total deposits using a fund filled with money from other banks.

Attention has been focused on the banks ahead of the July 29 release of stress test results on major banks, including five in Italy, by the European Banking Authority.

Nicolas Veron, senior fellow at the Breugel think tank in Brussels, says that Italy's bad loan problem was known before the British vote, but that and the stress test have helped highlight the issue: "So you have different things coming together, and most of them would have come together anyway, but the Brexit vote has not improved the context."

Italy's banking troubles are mostly contained to the country. But Italy is the third largest economy in the eurozone, so its troubles affect a major slice of the currency union.

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NOT JUST ITALY

Banks elsewhere are under pressure as well.

In particular, Deutsche Bank, Germany's biggest, has struggled to overcome the drag on profits from turbulent markets, high costs, and big payouts to settle misconduct charges, such as participating in rigging interest rate benchmarks. The International Monetary Fund recently named Deutsche Bank as the single biggest net contributor of risk to the global financial system, among 29 big banks designated as globally significant.

In May, the European Commission gave the German regions of Hamburg and Schleswig Holstein permission to increase their guarantees by 3 billion euros to HSH NordBank, on condition it is broken up and sold. The bank was hit by losses on shipping loans.

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BANKING ON THE ECONOMY

The health of the banks is crucial to Europe because that's where most businesses, especially small- and medium-sized ones that provide the most jobs, go for the credit. Bad banks that are saddled with unpaid loans are unlikely to make new ones.

In the United States, companies tend to raise credit more through financial markets, for instance by selling bonds. That's less of an option in Europe, where banks are king.

And banks are critical for passing on central bank stimulus measures to the wider economy. The European Central Bank is pumping 1.74 trillion euros ($1.93 billion) into the economy by buying bonds from banks, using newly printed money. But if the banks don't take the money they receive and lend it to businesses and consumers, the ECB's stimulus doesn't get through to the economy.

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INCOMPLETE UNION

European officials are chagrined to still be cleaning up banking problems six years after Ireland's government finances collapsed under the weight of bailing out banks. Spain's banks also needed a bailout in 2012.

The answer was a "banking union," a new system in which national regulators — thought to be too lenient on troubled banks — handed off supervision to the European Central Bank in 2014.

But other key elements of the banking union have been left unfinished. There is not yet EU-wide deposit insurance that would reduce the vulnerability of national deposit insurance to large losses, and lessen the blow to the local government.

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PROTECTING TAXPAYERS

Banking union also included a new set of rules for bailing out banks. Taxpayer money can be used only after bank creditors such as bondholders have been "bailed in," meaning they lose some of their money before taxpayers chip in. That provision was aimed at keeping the costs of rescuing banks from overwhelming government finances.

When it comes to Italy, there's a catch. About a third of bank bonds are held by small retail investors. Inflicting losses on them, as well as depositors, could be highly unpopular as Renzi faces a key referendum on constitutional reform in October. Using public funds to help the bank would diffuse the costs.

But that would also mean that the EU's hard-won banking union and bailout rules fail their first road test.

German Chancellor Angela Merkel said last week: "We can't re-do things every two years... We put a lot of work into this and this is the first practical implementation."

The European Commission has already said yes to Italy providing credit to solvent banks, short of bailing out bankrupt ones, and has said there are ways to help banks without harming retail bond investors.

That could mean forcing losses on creditors — and letting Italy pay at least partial compensation to small investors.