Banks would have to put aside more money to guard against risks arising from credit derivatives and also face limits on how much debt they can hold relative to assets under European Union proposals to overhaul capital requirements.

Tighter rules are needed though there is a risk the measures "could slow recovery," the European Commission said Friday. The agency is seeking views from banking supervisors and companies on the likely effect of its plans, which also include calls for lenders to set aside capital in good times to use as a buffer in hard times.

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