STRASBOURG (AFP) ― The European Parliament approved on Tuesday the last elements of a new set of rules to prevent failing banks from ever again driving EU member states into bankruptcy.

With “banking union” passed, “we now have in place a true European system to supervise the eurozone banks and deal with any future failures,” EU Financial Markets Commissioner Michel Barnier said.

The system is also widely seen as essential for the monetary union of the euro single currency whose very existence came under threat as the debt crisis forced Greece and then Ireland and Portugal to seek massive international bailouts.

At the height of the crisis in 2011-12, many in the financial markets were betting the euro would fail but a combination of savage and hugely unpopular austerity budgets and the state rescues just managed to hold the line.

Banking union comprises a new oversight system known as the Single Supervisory Mechanism which becomes operational in November under the European Central Bank.

It is complemented by a Single Resolution Mechanism which will, when advised by the European Central Bank, step in to stabilize or close down a bank before it can do any wider damage to the economy.

However, the International Monetary Fund warned last week that in its view more work was needed because the procedures appeared too cumbersome to ensure a rapid solution if a bank threatened the financial system

A fund ultimately worth 55 billion euros ($76 billion) and paid for by a levy on the banks themselves will cover the cost of any closures.

Similarly, customer deposits will be guaranteed up to 100,000 euros, with the banks also required to meet this commitment by setting aside enough reserves.

The banks have been blamed by many for reckless speculative lending and investments which helped drive the financial and then economic crash beginning in 2008.

Countries such as Ireland which tried to keep their failing banks afloat, were pulled down too when the extent of their debt overwhelmed government finances and forced it to seek an international bailout.

Now lenders must comply with stricter rules of conduct and capital levels, designed to limit the amount of risk they can take on and to ensure that shareholders and creditors shoulder the cost of any rescue, not the taxpayer. “The EU has lived up to its commitments: the banking union completes the economic and monetary,” Barnier said in a statement.

It also “puts and end to the era of massive bail-outs and ensures taxpayers will no longer foot the bill when banks face difficulties,” he said.

MEPs passed the measures in the last plenary session before May elections, completing a tortuous and hard-fought process.

European Union leaders had wanted to retain a large measure of control over their banks and so agreed a system whereby member states would have the final word on any closure.

Parliament said this allowed undue political influence in a decision which needed to be taken quickly so as to keep ahead of the financial markets.

The two sides finally reached a compromise last month, allowing for a faster decision-making process and clearing the way for Tuesday’s vote.

The measures passed limit member state “influence and political pressure significantly to allow more fairness, speedier action and lower costs to resolve bank problems,” a parliamentary statement said.

European Parliament head Martin Schulz said the outcome was “a major victory.”

The assembly had “succeeded in fighting off the illogical pressure of some countries during the negotiations,” he said.