All banks in the eurozone will be supervised directly by the European Central Bank in Frankfurt under new EU proposals to be unveiled next month.
The European Commission wants to create a single supervisory mechanism for the 6000 banks, with the ECB at its heart.
It will replace the current system of national regulators supervising banks. But it requires EU leaders' approval.
In many cases the national authorities failed to foresee and deal with banks that got into funding difficulties.
The banks then needed to be bailed out by national governments. This in turn increased the pressure on public finances.
The commission proposals form a crucial part of the plans being worked on to help stabilise the single currency, and to avoid a repetition of the current chronic debt problems damaging public finances across the region.
Officials hope it could be in place by early next year.
It is one step towards creating a genuine banking union for the euro. Policy makers say such a union is necessary to help convince markets that mechanisms are in place to safeguard the single currency's future.
There are though disagreements about the commission's proposals.
Some such as Germany want the ECB to have regulatory powers over just a handful of banks seen as large enough to potentially pose a significant threat to the single currency, were they to get into trouble.
But a European Commission spokesman, Stefaan de Rynck, said covering all banks would be "important for the credibility of the system".
"We have seen so-called non-systemic banks popping up and proving a systemic risk," he told reporters in Brussels.
National authorities would continue to have a role. While the ECB would be responsible for supervising all bank matters related to financial stability, it would be the national authorities that would implement the ECB's decisions in this area.