Europe's Central Bank Endorses a Banking Union FRANKFURT - The European Central Bank called on Tuesday for euro zone leaders to form a "banking union" to oversee its big banks, a move that would help shield countries and their taxpayers from the misfortunes of their troubled lenders. A banking union might address one of the causes of the euro crisis: the tendency for sick banks to undermine entire countries. The costs of taxpayer-financed bailouts in Ireland and Spain, among other countries, were so large that they raised questions about the creditworthiness of national governments. Such a union would also allow euro zone countries to share the financial burden of banking crises, perhaps avoiding a repeat of Spain's woes caused by Bankia and other ailing lenders. In a report issued Tuesday, the central bank said it envisioned that euro zone countries would share responsibility for regulating big banks and for managing a common deposit insurance fund. Countries would also create procedures for winding down terminally ill banks so taxpayers would not have to bear the cost, the bank said. Creating such a banking union would be a long process. But Vítor Constâncio, the vice president of the central bank, said a decision to begin work on an alliance would help to reassure financial markets. "It would be a very powerful sign countries want to stick together in a monetary union," Mr. Constâncio said. He praised an agreement forged by European leaders on Saturday to finance a rescue plan for Spanish banks. The 100 billion euros, or $125 billion, designated for the rescue should be more than enough, he said. "One of the elements that was creating doubts in the market has been dealt with in a proper way," he said. Mario Draghi, the central bank's president, had previously expressed support for the idea of a banking union, but Tuesday's statement was the central bank's most explicit call for euro zone leaders to begin work on one. But the central bank's position appeared to be at odds with that of the Bundesbank, the powerful German central bank. Andreas Dombret, a member of the executive board of the Bundesbank, said on Tuesday that a banking union would make sense only after countries in the euro zone had formed a broader fiscal union, a process that would take years. "The recent proposals of a so-called banking union appear to be premature," Mr. Dombret said in London, according to a text of his remarks. The Bundesbank is part of the European system of central banks led by the European Central Bank, but the German institution has often diverged from its peers on policy issues. The E.C.B. proposal came as part of the bank's twice-a-year assessment of risks facing the monetary union. The report acknowledged that stress in the euro zone had risen again after a respite earlier this year when the central bank issued 1 trillion euros in inexpensive, three-year loans to banks. The report argued that the extraordinary loans helped because they removed doubts that banks would fail for lack of market funding. "They had a lasting effect on the situation," Mr. Constâncio said. The 135-page report also provided data on a wide range of risks but avoided discussing the one that may be foremost on investors" minds: the possibility that Greece could leave the euro zone. "We don't see that Greece will exit the euro area," Mr. Constâncio said. In any event, he said the fallout would be too tricky to forecast. "It would be very difficult if not impossible," he said, "to assess the consequences of the exit of a country."