The European Commission intends to propose the creation of an agency to wind down problem lenders, the EU’s top regulatory official said yesterday, outlining plans to grant the European Central Bank sweeping powers to monitor all eurozone banks.

In remarks e-mailed to Reuters, Michel Barnier addressed one of the most contentious points in dealing with the financial crisis – how to close down laggard banks.

This issue is central to his blueprint for a so-called banking union. But such decisions are usually left to national governments, who have to shoulder the cost. The creation of a central agency might change that.

“I intend to propose further steps later on building on the common supervision,” Mr Barnier, the European Commissioner in charge of financial regulation, said.

“It is clear to me that we need to create a European resolution auth­ority separate from the supervisor, as part of my commitment to make sure that banks themselves and not taxpayers pay for failing banks.”

It is unlikely that a resolution agency would have a remit to close banks outside the eurozone as this would be opposed by countries such as Britain, which has said it will not take part in a banking union.

The blueprint for a banking union, which is due to be finalised by the EU’s executive and announced in mid-September, is intended to forge a unified front among eurozone countries in tackling a five-year banking crisis.

“It is crucial that we raise responsibility for banking supervision in the euro area to the ECB,” Mr Barnier said.