The European Commission has put forward proposals for an EU financial markets regulator. The idea is designed to help prevent a new credit crisis.

The move is based on decisions taken by European Union government leaders in June. The EU financial watchdog would not be able to impose sanctions but would have to warn banks and other financial institutions if they were taking too many risks.

The commission also wants the watchdog to provide governments with recommendations, such as advising them to step in and take action at a bank. European Commission President José Manuel Barroso hopes the move will help efforts to agree a global approach to the banking issue at the G20 summit this week in Pittsburgh in the United States.

The EU member states and parliament still have to approve the commission's proposals.