EU officials reach deal on failed banks

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BRUSSELS -- European finance ministers have reached a political agreement on how to set up a joint institution tasked to shut down or prop up failing banks, European Union banking Commissioner Michel Barnier reported on his Twitter account.

The Wednesday agreement on the so-called single resolution mechanism and the fund that will serve as its financial backstop marks a milestone toward stabilizing the bloc's financial system.

The European rescue agency will be financed by a levy on banks poised to garner 55 billion euros ($76 billion) over 10 years. Until the full amount will be available, bank rescues will be paid for through a complex combination of funds from national backstops and the European fund.

The agreement marks the second crucial step in the 17-nation eurozone's so-called banking union after an agreement to centralize oversight over the bloc's biggest banks earlier this year.

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