BRUSSELS (AP) -- The European Commission wants to create a new financial backstop for ailing banks from its member countries that do not use the euro currency.
The 17 EU countries that use the euro have a 500 billion-euro fund, called the European Stability Mechanism, that they can tap to help rescue troubled banks. But the other 11 members, which include Britain, Poland and Hungary, do not.
For those countries, the Commission, the 28-nation EU's executive arm, is proposing to use an existing 50 billion-euro ($68 billion) fund currently being used as a backstop for countries experiencing a balance-of-payment crisis, Commission spokesman Simon O'Connor said Thursday.
The change will require unanimous approval by EU governments, which seems far from certain. Germany and Britain are concerned about the insufficient legal basis for such a fund, and many nations are also reluctant to commit their taxpayers' money to save banks in other countries. Opponents also fear it might ease pressure on countries to clean up their banking sectors without external help.
Still, EU officials hope to reach an agreement on the new fund by the end of the year to have it in place for next spring.
It's about "providing a credible public backstop at the European level capable of reassuring supervisors and market participants that financial stability will be assured," O'Connor said.
O'Connor stressed a decision was needed ahead of the European Central Bank's review of banks' balance sheets early next year. The ECB will carry out the review as it prepares to become the central regulator for the EU's biggest banks in late 2014.
The review, complete with a stress test to see how banks would fare in times of trouble, is likely to identify capital shortfalls worth billions of euros, if not dozens of billions, analysts say. Banks will primarily seek new capital on the markets, but if that proves unviable governments will have to step in.
While Britain, which is also home to the bloc's biggest financial industry, would certainly be capable to plug any capital shortfalls on its own, governments in smaller economies with a weaker financial position, like Hungary or Romania, might struggle to raise sufficient capital.
The EU's balance-of-payments fund currently has about 40 billion euros left of its initial firepower, after granting assistance to Latvia, Hungary and Romania since 2010.
Tapping the fund requires countries to apply and to accept tough conditions, just as eurozone nations must commit to reforms and budget discipline to qualify for ESM aid.
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