Plans for a single bank resolution mechanism will be put forward by the European Commission on Wednesday (10 July), a spokesman said today.

The proposal, which represents the next step of the European Union’s banking union, follows agreement on a single bank supervisor for the eurozone earlier this year and common bank resolution and recovery rules last month.

However, the proposal will come too late for discussion by EU finance ministers who hold their last meeting before the summer on Tuesday (9 July). They next meet on 13 September.

A single resolution mechanism, called for by eurozone member states last year, would oversee the winding up or restructuring of failed banks and monitor and co-ordinate the work of national authorities, particularly for cross-border institutions.

The proposal is likely to trigger months of arguments over the extent to which the new mechanism would have the power to over-rule decisions made by national authorities. The German government has already said that it is unlikely to support a eurozone-wide resolution authority without it being enshrined in a revision of the EU treaties and wants to see a much looser model of co-operation between national authorities.

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