LUXEMBOURG (AFP) ― EU finance ministers took a key step Tuesday toward a “Banking Union,” the new regulatory framework meant to prevent any repeat of the financial meltdown which plunged Europe into crisis.

Ministerial approval of the Single Supervisory Mechanism, “the first pillar of Banking Union ... is a momentous step,” EU Financial Markets Commissioner Michel Barnier said.

It is “the start of a new era for the supervision of eurozone banks,” Barnier said.

The SSM, 13 months in the making, will come into force in one year’s time, in accordance with EU practice.

It was originally supposed to start early next year but the timetable slipped amid sharp differences over its precise role and especially over how it would relate to non-euro EU countries.

Non-euro Britain led the doubters given concerns over London’s future as one of the world’s most important financial markets.

Britain, in part reflecting London’s global role, is home to the European Banking Authority, which is supposed to draft the rules for all banks in the EU while the SSM is to be run by the Frankfurt-based European Central Bank.

To ensure that the 17 eurozone members do not out-vote the 11 non-euro members also grouped in the EBA, London got agreement in December that there would have to be a “double majority” in both camps for any action.

This understanding, which offers Britain a virtual veto, was confirmed again in talks this week, clearing the way for the SSM.

“The U.K. continues to support Banking Union and welcomes today’s final agreement,” a British statement said.

As well as helping stabilize the euro, it also crucially “puts in place strong protection for those member states not taking part,” it added.

The SSM agreed Tuesday is to be complemented by a Single Resolution Mechanism to close failing banks and a deposit guarantee regime to protect savers.

Combined, this will provide a unified regulatory framework intended to prevent taxpayers from paying for disastrously expensive bank bailouts which led to years of austerity and recession in the eurozone.

The resolution mechanism however is proving even more controversial than the SSM.

While Barnier said he hoped to get political agreement on resolution by year-end, many member states including powerhouse Germany are reluctant to cede control of their banks and are concerned about the scheme’s expense.

German Finance Minister Wolfgang Schaeuble was notably restrained.

“We have made a step forward by deciding ― probably ― the legal basis for the SSM,” Schaeuble said.

“Now we have to make sure to decide on the other legal issues as soon as possible,” he said.

Jeroen Dijsselbloem, Dutch finance minister and head of the group of 17 eurozone finance ministers, said “some countries are still debating about the legal base (of the SRM) so I have to convince them or find another solution.”

As the debate twists and turns, an immediate practical issue concerns “backstop arrangements” to pay for potential bank closures until the SRM begins its work, most likely in several years.

One option being discussed is to tap the European Stability Mechanism, the 500-billion-euro eurozone bailout fund which has been used to help Spanish banks.

However, it is unclear how this would work in practice and especially if a member state seeking such ESM help would also have to accept tough economic policy conditions as in the full debt bailouts accorded Greece, Cyprus, Ireland and Portugal.

Sweden’s Anders Borg said ministers “first and foremost must clarify backstops” before the ECB completes tough asset tests on the banks next year to pave the way for the SSM to begin its work.

The stress tests, which are supposed to be much tougher than previous reviews, should give a clear indication of whether European lenders need fresh capital.

If they do, new rules agreed at the height of the eurozone debt crisis require governments to progressively ’bail-in’ private creditors and uninsured larger depositors.

If that is not enough, then state aid is the next option while the bailout fund is also another possibility.

“Many challenges lie ahead but I am confident that (Banking Union) will succeed,” Barnier said.