RUSSELS, Dec. 18 -- European Union (EU) finance ministers on Wednesday reached an agreement on how to build a mechanism to close failed banks, EU Commissioner Michel Barnier said.

The so-called single resolution mechanism (SRM), together with a single supervisory mechanism (SSM) and a single deposit guarantee mechanism, constitutes three pillars of the eurozone's planned banking union for cutting the "vicious circle" between sovereign debt crisis and banking crisis, and make sure taxpayers won't foot the bill for future bank bailouts.

"As the agreement by Member States for SRM has been reached, negotiations with European Parliament can now start," said Barnier, EU commissioner for internal market and services.

Rimantas Sadzius, Lithuanian finance minister, hailed the agreement, saying, "It will be the fastest record in EU history" if the European Parliament approved it in two months "despite many complicated issues involved."

The new agreement includes a backstop to the single resolution fund. According to existing procedures, during the fund's initial build-up phase, bridge financing would be available from national budgets or the permanent eurozone rescue fund called European Stability Mechanism.