European banks may find themselves cash strapped soon, as the European Banking Authority (EBA) has stated that they want banks to have more reserved funds to protect themselves against any future market disasters.
The EBA says that banks may have to collectively raise £200 billion euros (£175 billion) to boost banking capital reserves.
Experts say that banks will struggle to find the money to recapitalise themselves, and that it is likely that the governments of major banks will need to step in and provide the funding.
The banking industry regulator of Europe says that it wants banks to boost their capital reserves by 9 or 10% of their overall assets, after accounting for loans to Greece, Ireland, Portugal, Spain, and Italy.
All of these countries are within the single currency euro zone and remain the most indebted, with Greece, Portugal, and Ireland relying on European Union-International Monetary Fund bailout money.
This is another in highly-public attempts for the euro zone to solve its sovereign debt crisis and jump start growth back into their economies.
On Tuesday, Slovakian opposition and some parties of the coalition government voted to reject the bill that would expand the euro zone bailout fund to 440 billion euros.
Now, as the opposition has struck a deal for new elections in exchange for passing the bailout fund, the final euro zone state looks as though it will ratify the changes to make the bailout fund stronger.
The new fund will be empowered to buy euro zone government debt and and offer credit to both member states and banks.