BRUSSELS (AP) -- The European Union plans to force the region's biggest banks to raise billions of euros in capital to better withstand market turmoil over the high debt in several euro countries, the European Commission's president said Wednesday.

Jose Manuel Barroso also warned that key European banks should not be allowed to pay out dividends or bonuses until they have raised their capital buffers to the new standards.

The fear gripping the financial sector now is that banks could take big losses on bonds they own from governments with shaky finances, like Greece. That uncertainty is stifling lending _ both between banks and to the wider economy _ which threatens to throw the 17-nation eurozone into a new recession.

Banking shares and the euro continued to surge after Barroso's proposals, continuing a weeklong rally triggered by hopes that the eurozone may finally get a grip on the worsening debt crisis.

Under the new rules, systemically important banks in Europe will have to implement new international rules on bank capital much earlier than 2019, as was initially foreseen.

That means the continent's biggest banks have to bolster the financial pad they maintain to absorb losses to about 9 percent of their loans, investments and other risky assets, said a person familiar with the matter, compared with the 5 percent to 6 percent they needed to pass this summer's stress tests.

The person did not say when the new capital levels would have to be reached, saying only that it would be ``substantially earlier'' than 2019. The person was speaking on condition of anonymity because the European Banking Authority won't disclose the new standards until next week.

Barroso presented the proposals on bank capital as part of a broader plan to tackle the currency union's debt troubles, which has dragged on for close to two years.

He also suggested for continued support for Greece, a more effective use of the resources of the eurozone bailout fund, and bigger powers for the Commission to control national budgets.

The EU's executive hopes the bloc's leaders will embrace its suggestions at a crucial summit on Oct. 23. Officials believe the meeting may be their last chance to solve the debt crisis before it spins out of control. By revealing its plans ahead of that meeting, the Commission sought to pile more pressure on national governments to adopt radical action.

To assess banks' capital needs, Barroso said their exposure to all sovereign debt should be taken into account ``in a transparent way.''

In its full proposals, the European Commission, the EU's executive arm, asked for a ``prudent valuation of all sovereign debt, whether in the banking book or the trading book'' of banks.

That's an important change in practice from July's stress tests, when banks had to take writedowns only on bonds in their trading books, where they hold assets they could sell at any time.

Lenders did not have to prove they have enough capital to also absorb potential losses on bonds they plan to hold until they mature.

Barroso said if banks can't raise the necessary capital on the market, they should get help from governments, who in turn can ask for money from the eurozone bailout fund.