Federal Deposit Insurance Corp. Chairman Sheila Bair said European regulators need to force their banks to hold more capital to help stabilize financial markets and promote economic growth.

"In Europe they do need to focus more on the adequacy of the capital base of their banking institutions," Bair said in an interview Sunday in Beijing, on the sidelines of the U.S.-China Strategic and Economic Dialogue.

She said European banks should face leverage limits and be required to hold more and higher-quality capital to insulate the global economy from financial instability.

European officials should be "making it clear to the markets and the international community they have good strong rules in place to ensure the capital base of the banking system going forward, which would help their economic recovery, which in turn would help the rest of the global economy," Bair said.

"There have been a lot of concerns about what will happen in Europe and to what extent it could impact the Chinese economy and the U.S. economy."

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