As urgency mounts over Spain\'s finances, the EU on Wednesday unveiled new plans for winding up failing banks, a first step towards a controversial eurozone \"banking union\". With the clock ticking down to an end-June summit seen as pivotal to the euro\'s future, Madrid needs help to find 80 billion euros ($100 billion) for bank recapitalisations in the midst of a deep recession brought on by the bursting of a property bubble. Against this sombre backdrop, the European Central Bank, International Monetary Fund and European Commission insist the eurozone must establish a banking union as a path towards deeper fiscal and political integration. This should, the three bodies say, feature centralised supervision, cross-border deposit guarantees and a shared system for lenders that go bust -- the plan that EU markets commissioner Michel Barnier set out in Brussels. Spanish Prime Minister Mariano Rajoy has identified the need for \"fiscal integration, with a fiscal authority, and banking integration, a banking union with eurobonds, with a banking supervisor and a European bank deposit guarantee fund.\" France and Italy back this line, but Germany sees problems with introducing the deposit guarantees as well as allowing eurozone rescue funding to go straight to banks, in this case Spain\'s. \"These instruments must be applied for by governments,\" not banks, said Steffen Seibert, spokesman for Chancellor Angela Merkel. He also underlined that Berlin opposes cross-border deposit guarantees before other \"important steps towards integration\" have been taken. Banking and fiscal union would entail massive shifts in sovereignty over budgets and supervision of lenders. Speaking before a meeting with Commission chief Jose Manuel Barroso on Monday, Merkel said that in the medium-term, Europe must clarify \"to what extent we have to place systemically relevant banks under specific European supervision.\" The credit rating agency Moody\'s on Wednesday lowered its ratings for six German banks including Commerzbank, pointing to \"the increased risk of further shocks emanating from the euro area debt crisis.\" Barnier echoed that step-by-step approach as he told a news conference the objective was \"to create a healthy, solid and transparent base\" across the eurozone. First called for by leaders of the G20 group of major world economies in November 2009, Barnier\'s proposal -- which has still to get past governments and the European Parliament -- is designed to \"avoid\" a future banking crisis \"before it gets too late.\" Europe has been plagued by a vicious circle of sovereign and banking debt for the last few years. Since a global financial crisis erupted in August 2007, a succession of banks -- from US giant Lehman Brothers to leading Irish groups and Franco-Belgian Dexia -- have collapsed, at huge cost to already massively stretched public purses. In a bid to prevent investor flight or runs on banks in one country, such as Spain, from dragging down the entire system, a core objective for Barnier is to ensure that essential functions -- including working ATMs for the time it takes to deal with a bank collapse -- are maintained across borders. Like a living will, banks should pre-pay their own \'funeral expenses\' though contributions to national resolution funds to ensure that \"losses are borne by bank shareholders and creditors\" and to \"minimise costs for taxpayers.\" Resolution funding should amount to at least 1.0 percent of covered deposits over 10 years, and more for bigger banks. The reform would give EU authorities vast powers to step in and wind up activities of failing banks. Salvageable assets and bad debt would be divided between a \"bridge bank\" and a \"bad bank.\" A new \"bail-in\" tool would give resolution authorities \"the power to write down the claims of unsecured creditors\" at the biggest financial institutions, meaning investors would suffer losses due to the collapse. The reforms, if approved, would not go into effect until 2018.