Euro zone countries are trying to find a way to pay for the repair of their broken banks, testing governments' resolve to come clean on the problems that have festered since the global financial crisis.
Here are the steps taken so far to impose order on Europe's financial system and draw a line under years of taxpayer-funded bailouts that have prompted public outrage:
* First, the European Union agreed in 2012 common rules for Europe's 8,000 banks to set aside more capital to cushion against losses. Higher buffers strengthen banks to withstand shocks, such as a slump in property prices or recession. Banks with higher-than-average capital attract deposits.
* Earlier this year, the European Commission, the EU executive, sharpened the bloc's state aid rules to share the costs of bank failures, stipulating that shareholders and junior bondholders will share the burden of saving a stricken bank.
* In March, the bailout of Cyprus set a new precedent for saving banks, by also forcing losses on senior bondholders and depositors with more than 100,000 euros ($135,000).
EU finance ministers agreed in June to adapt a similar but milder approach in EU law. The framework needs to be finalized with lawmakers in the European Parliament before coming into force.
* In September, Europe took a significant step towards a single banking framework for the euro zone, known as banking union. EU lawmakers granted new powers to the European Central Bank to oversee the currency bloc's 6,000 banks in 17 countries.
Supervision by the ECB is expected to start towards the end of 2014. Banking union is conceived as a three-stage process involving a single bank supervisor, a single resolution authority and a single deposit-guarantee scheme.
* Now comes the much harder step of establishing a single euro zone authority to wind up bad banks, which is resisted by Germany because as Europe's largest economy it fears being forced to pay up for other countries' banking losses.
* In the meantime, the European Central Bank will launch a series of health checks on euro zone banks, as part of its supervisory role. But if, as expected, it reveals the extent of bad loans at European banks, the bloc needs ways to repair its banks and recapitalize them.
A failure to put aside money to deal with the problems revealed could rattle fragile investor confidence and compound borrowing difficulties for companies, potentially killing off the euro zone's meek recovery.
(Reporting by Robin Emmott and John O'Donnell)