The European Union proposed new rules forcing banks to raise some €460-billion ($619-billion) in capital by 2019 to protect themselves from another financial crisis.
With Wednesday's proposal, the 27-country bloc becomes the first jurisdiction to implement the so-called Basel III rules on bank capital, agreed by the world's biggest economies after the collapse of Lehman Brothers rattled global markets in 2008.
"We cannot let such a crisis occur again and we cannot allow the actions of a few in the financial world to jeopardize our prosperity," said the EU's Internal Markets commissioner Michel Barnier.
The proposals force the region's banks and investment firms to hold capital buffers that are bigger, of better quality and more easily accessible. They are "a tremendously important step forward in learning the lessons from the crisis and adopting a new approach to risk," Mr. Barnier said.
The EU will force all 8,200 banks and investment funds based in the bloc to stick to the new capital requirements. By contrast, the United States, which has promised to implement the Basel III rules, will only make the 20 biggest lenders apply the rules.
The new rules will come into force gradually before banks have to reach the full capital levels in 2018, forcing them to raise some €460-billion in extra capital by 2019, Mr. Barnier said.
But the commissioner said that the banks will be given enough time and that he was sure the new rules will not restrict their ability to fund the European economy in the meantime.
On top of the capital and liquidity requirements, Wednesday's proposals give more powers to banking supervisors, such as the right to run annual national stress tests, in addition to the EU-wide ones, and the power to fine firms breaking the rules up to 10 per cent of revenue.
They also set new requirements for more diversity of the boards of financial firms and restrict the influence of rating agencies, by getting banks to carry out more of their own risk assessment.