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German Cabinet approves ECB bank supervision

German Chancellor Angela Merkel attends the weekly cabinet meeting at the chancellery in Berlin, Germany, Wednesday, May 8, 2013. At left is German Economy Minister Philipp Roesler. (AP Photo/Michael Sohn)

BERLIN (AP) -- German Chancellor Angela Merkel's Cabinet has approved plans to hand the European Central Bank the power to oversee the continent's lenders, the main part of the 17-nation eurozone's efforts to stabilize its financial system.

Wednesday's formal approval by ministers moves a European banking union one step closer to reality, but doesn't resolve an argument over whether there also should be a centralized authority to unwind failing banks.

ECB executive board member Joerg Asmussen in Brussels said Wednesday that a "strong authority" is needed to make quick and impartial decisions on winding up banks. He said it should "have a European resolution fund at its disposal" that would be set up by eurozone governments.

But Germany argues that would require time-consuming changes to European treaties.