EU calls on banks to increase capital buffers

The president of the European Commission said Wednesday that banks should temporarily raise their capital buffers to better withstand the effects of the region's debt crisis, as AP reported. As he presented a broad new plan on how to fight the financial turmoil, Jose-Manuel Barroso said systemically important banks should temporarily have a "significantly higher capital ratio of highest quality capital." Until banks have raised their capital buffers to the new standards, they should not be allowed to pay out dividends or bonuses, Barroso said. He added that if banks can't raise the capital on the market, they should get help from governments, who in turn can ask for money from the eurozone bailout fund. Barroso also called for a permanent bailout fund, the European Stability Mechanism, to come into force already in mid-2012, one year ahead of schedule.