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Eurozone finance ministers worked to keep banking sector reforms on track Thursday and ensure that it is creditors who foot the bill for future bank rescues, not the weary taxpayer.
The aim is a "banking union", a new regulatory framework to prevent a repeat of the debt crisis by letting European Union authorities come in to save or close any bank in trouble before it brings down the whole system.
After creating a regulatory body last year, the next step is setting up what is known as the Single Resolution Mechanism, but there are sharp differences over how it should work, especially alongside national authorities jealous of their mandate.
There are also serious questions about who ultimately controls it, how it would be funded and how much money it would need -- recent bank rescues have cost tens of billions of euros (dollars).
The new resolution scheme would put this burden on bank creditors, including larger depositors, who will all be ranked in order of their contribution to future 'bail-ins.'
A controversial Cyprus rescue in March bailed-in larger savers in its two biggest banks to pay for their restructuring but the move sparked popular outrage that deposits were no longer sacrosanct.
An EU source said that while the principle of creditors paying a price was accepted, several governments want some flexibility in how to operate this option.
"We want some discretion ... flexibility whereby we can treat creditors" according to their exposure and importance, the source said.
Giving national governments leeway while still ensuring that all member states follow the same rules is going to prove difficult, the source added.
Ministers will also discuss the role of the 500-billion-euro ($665-billion) European Stability Mechanism, set up to back-stop struggling states but now also allowed to recapitalise banks directly.
This ability by the ESM was conditional on having an overall bank regulator, duly agreed last year as the Single Supervisory Mechanism which centralises oversight of the eurozone's largest lenders under the European Central Bank.
Since then, progress on the new regulatory body has lagged, meaning it is only likely to be operational in the second half of 2014.
A third banking union element will guarantee bank deposits, reassuring savers who might otherwise set off a bank run, but it is a distant prospect until the framework for winding up insolvent banks is settled.
Jeroen Dijsselbloem, Dutch finance minister and head of the eurozone finance ministers group, said there "is still a lively debate going on about" the bank resolution mechanism.
"It is essential that we have a strong authority," Dijsselbloem said, adding: "We will work on that today and tomorrow."
The 17 eurozone finance ministers are joined Friday by their 10 non-euro colleagues, picking up where the discussions leave off Thursday so that the EU as a whole can come to a conclusion on the issues and ensure, as far as possible, uniform treatment across the bloc.
Eurozone ministers will review the Cyprus bailout and recent progress in twice bailed-out Greece, where the government's fiercely contested decision to close the state broadcaster has created fresh uncertainty.
Finance ministers are also expected to formally approve a 7-year extension on Ireland's and Portugal's bailout loans and endorse fiscal targets agreed last month as Brussels tries to get all 27 member states on the same economic page.
Getting budget deficits below the 3.0 percent of Gross Domestic Product limit is crucial to reducing total public debt -- the source of all the problems -- to less than the 60 percent EU ceiling from the now average 90 percent.
Ministers will also formally endorse Latvia's joining the eurozone in January when it becomes the 18th member, what one EU source described as a "very positive" sign of faith in the euro.