EU finance ministers face tough talks Tuesday on the next key step to a "Banking Union," the new regulatory system to ensure banks avoid the risky excesses which brought Europe to its knees. The 28 are trying to reconcile deep differences over a Single Resolution Mechanism (SRM) meant to stabilize, and if necessary, close a failing bank before it does too much damage. The SRM will work alongside an already agreed Single Supervisory Mechanism under the European Central Bank which will oversee the largest banks directly, and the smaller lenders indirectly via national authorities. The system will see that eurozone lenders stick to the rules and so do their proper job -- lend to business to generate growth and much-needed jobs. The SSM, which non-euro countries can ask to join, took 13 months to negotiate and is due to come into effect late next year after the ECB vets the largest banks to see if they are strong enough on their own or need fresh capital. The ECB wants both mechanisms operational at the same time, since if the SSM finds a bank to be at risk, it is the SRM that has to step in to rescue or close it. "Both the SSM and the SRM are essential parts ... of the Banking Union which will help break the link between banks" and governments, and ease the problem of their refusing to lend despite a mountain of cheap funds being made available, the ECB said last month. French and German differences over scheme's scope The main sticking point is the scope of the SRM. EU powerhouse Germany believes it is simplest if the mechanism covers the same banks overseen directly by the ECB -- that is, nearly 130 lenders holding about 85 percent of all eurozone banking assets. Critics say this reflects Berlin's preference to retain a large degree of control over its banking system, having ensured smaller lenders remain a national responsibility in the SSM. France in contrast believes all 6,000 eurozone banks should be included because it is often the smaller lenders which get into trouble first, bringing down their larger peers to set off a chain reaction of destruction. Non-euro Britain meanwhile remains wary, accepting Banking Union as necessary for the single currency area but unwilling to see Brussels gain any influence over London, one of the world's largest financial markets. On Friday, Germany said it was confident of progress even as officials warned the talks will be difficult and lengthy. "We are confident that we will advance a fair bit" at next week's talks, a spokesman said as German Finance Minister Wolfgang Schaeuble held discussions in Berlin with his French, Italian and Spanish counterparts, as well as eurozone finance chief Jeroen Dijsselbloem. At the same time, the spokesman said there was "no so-called compromise paper" on the table. SRM supporters hope for an accord Tuesday so it can be finalized by EU leaders later this month, giving the European Parliament time to approve it before elections in May. If that SRM timetable slips, then the whole Banking Union framework could hang fire. The European Commission, which is expected to run the SRM despite reservations by some member states, said: "Banking Union is our top priority and we are all committed to reaching a political agreement on the SRM before the end of the year." "That is why negotiations are taking place day and night, at all levels ... to make that agreement happen," a spokeswoman said Friday. The 17 eurozone finance ministers meet Monday to review the economic outlook and progress in bailed-out countries, with Ireland due to exit its rescue program December 15. They join their 11 non-euro colleagues Tuesday.