Assistance to failing banks - EUR 55 billion fund for future European Banking Union

(Photo: I.Vukša)

The fund would be backed by a new agency, which will decide on how to deal with failing banks.

The proposed banking union consists of three parts or the so-called three pillars. These are a common banking supervisor - the European Central Bank (ECB), which will be given the power to monitor the health of, and the risks taken, by all the major banks within the eurozone.

The second part is the Single Resolution Mechanism, This means that if a bank anywhere in the eurozone gets into trouble, the process of bailing it out - or even letting it go bust - would be managed by a common "resolution authority".

The final pillar of the proposed unions involves a common deposit guarantee, which means that anyone with an ordinary bank account anywhere in the eurozone would have their money - up to a limit of 100,000 euros - guaranteed by a common eurozone fund.

The idea of a banking union is to make huge taxpayer-funded bank bailouts a thing of the past.

- If we continue on the path toward banking union then we will be able to continue the stabilization of the European currency as the basis for a return to stable growth in Europe - said Wolfgang Schaeuble, Germany's finance minister.