by Mathew Katz

High-ups at the European Union are looking to put an end to economic busts by making sure banks are liquid enough to stand a crisis. The proposal seems to make a lot of logical sense: banks will have to build up much larger capital reserves during good times, so they'll have the huge savings needed to ride out a crisis.

Right now, European banks can shed reserves when the economy is doing well, forcing them to restrict lending to build up reserves during economic contractions like the current recession. Germany is hoping to loosen capital reserve rules until the recession is over, so banks can lend more without having to worry as much about having to save up assets.

The U.S. government has encouraged American banks to take up similar saving measures, but that's still optional.