The European Commission says a new agency should be set up with the authority to wind up sick banks.
It is the next piece of the so-called Banking Union, which is aimed at averting future crises.
But it will require the approval of EU member states to turn it into law.
The European Central Bank will start supervising lenders in the eurozone from late next year.
Michel Barnier, EU commissioner for the internal market, said the move will mean that “we will be able to organise bankruptcy without the help of taxpayers.”
“This is the last piece of banking union, together with the supervision of the euro area. We will create a common authority to wind up a bank whenever it will be necessary,” he told euronews.
However, there are disagreements between EU members over how far banking union should go.
France hopes for a deal by the end of the year.
Germany is highly unlikely to accept a new agency with the clout to overrule national authorities.
It also argues it would be illegal under EU treaties.
Berlin opposes any plan that could see it having to pick some of the tab if a bank failed elsewhere in Europe.