German Chancellor Angela Merkel's Cabinet approved Wednesday, May 8, plans to hand the European Central Bank the power to oversee the continent's lenders, the main part of the 17-nation eurozone's efforts to stabilize its financial system, The Associated Press reported.

The formal approval by ministers moves a European banking union one step closer to reality, but doesn't resolve an argument over whether there also should be a centralized authority to unwind failing banks.

ECB executive board member Joerg Asmussen in Brussels said that a "strong authority" is needed to make quick and impartial decisions on winding up banks. He said it should "have a European resolution fund at its disposal" that would be set up by eurozone governments.

But Germany argues that would require time-consuming changes to European treaties.