Wednesday's proposals followed others put forward in recent months with a view to raising lenders' capital requirements, set new loss-absorbing buffers and facilitate the orderly liquidation of failing banks.

Brussels believes such measures will make the EU's banks a lot safer after many of them were rescued with taxpayers' money during the financial crisis.

The European Commission argues that reducing banks' exposure to so called non-performing loans (defined by the ECB as loans that have seen no interest payment for more than 90 days) could bolster the case of EU nations creating a common bank deposit insurance which would spread risk across the bloc.

Germany not amused

This idea is opposed by Germany and other countries which fear they may have to bankroll losses at weaker lenders in other states.

"As Europe and its economy regain strength, Europe must seize the momentum and accelerate the reduction of non-performing loans," European Commission Vice President Valdis Dombrovskis said in a statement.

The EU executive also proposed measures to facilitate the offloading of the existing stock of bad loans. Under the plan, EU countries would be able to agree with corporate borrowers an accelerated out-of-court mechanism to recover the collateral in case loans turn toxic.

This is meant to avoid lengthy judicial procedures currently slowing the recovery of lenders in several EU states.

hg/jd (Reuters, dpa)