AMSTERDAM (Reuters) - Eurogroup chairman Jeroen Dijsselbloem rejected calls for banking union regulations to be loosened after weeks of falling bank shares, saying new European bail-in rules had caused investors to look “more critically” at risks born by banks.

Eurogroup President Jeroen Dijsselbloem arrives at a European Union finance ministers meeting in Brussels, Belgium, January 15, 2016. REUTERS/Yves Herman

Speaking on Dutch radio on Saturday, Dijsselbloem, who is also the Dutch finance minister, said stricter rules imposed in the wake of the 2007 financial crisis that would restore confidence in banks.

“We now have much stricter rules for who pays the bill if banks go wrong, and it’s not the taxpayer,” he said. “For that reason, investors are looking much more critically at banks, and that is leading to a correction on equity markets.”

The Stoxx Eurozone Banks Index .SX7E has fallen more than 25 percent since the beginning of the year, prompting policymakers including Bank of Italy governor Ignazio Visco to call for a more gradual introduction of rules that place the burden of propping up failing banks on investors.

But Dijsselbloem, who chairs meetings of euro zone finance ministers, said this would be “the worst possible thing to do.”

“We must first make the banking union stronger in my view,” he added. “Capital requirements should go up further in coming years. That would strengthen confidence in banks.”

Dijsselbloem also said Europe’s economic outlook remained cautiously positive despite a recent slew of indicators pointing to an economic slowdown, and bad economic news from China and the United States. He warned that talk of crisis risked becoming a self-fulfilling prophecy.

“Since 2008 we have been sitting continually in crisis mode in our heads even when you can see from the real economy that we are emerging from it,” he said. “Banks are much stronger, balances are much stronger and they have been cleaned of bad portfolios.”

Low profitability and close to 1 trillion euros worth of non-performing loans, a legacy of Europe’s crisis, are also weighing on the sector but banks are now well capitalized after years of regulatory pressure to build up their buffers.

“[Eurozone banks] are in a much better position today than they were at the height of the debt crisis in 2011 and 2012,” European Central Bank board member Bernard Coeure told the Rheinische Post newspaper on Saturday.

“Thanks to the banking union they are now much more resilient.”