The EU needs fresh powers to wind up failing banks in a speedy push to the next phase of banking union after a landmark agreement on centralised supervision, according to Mario Draghi, president of the European Central Bank.

The hard-won agreement among eurozone finance ministers yesterday to appoint the ECB as the “single supervisory mechanism” was the first and easiest step in a banking union plan aimed at preventing a repeat of the financial contagion that dragged down banks and sovereigns in the crisis.

The next phase – agreeing on a common resolution authority to oversee the orderly winding down of insolvent lenders – is likely to be even more fraught as it implies taxpayers might have to pay for the mistakes of a bank in another country.