Europe considers a ‘banking union’ - by David McHugh and Raf Casert

As Europe’s debt crisis intensifies, top officials say the continent urgently needs a central authority with the financial muscle to fix broken banks.

The proposal could give immediate relief to Spain’s increasingly fragile economy, with its borrowing rates rising to unsustainable levels, rattling investors.

The European Commission called Wednesday for a ‘‘banking union’’ that could oversee and, if needed, bail out banks without having to go through national governments. It would have the power to force banks to heal their finances and have access to a pool of money to rescue banks, lifting pressure off individual countries, like Spain, that are already strapped for cash.

Germany resists allowing a central body to spend money — much of which Berlin provides — to rescue banks. But markets nudged Spain, the fourth-largest economy in the eurozone, ever closer to needing financial aid that Europe can scarcely afford to give it. Its 10-year bond yield rose to 6. 64 percent Wednesday, close to the 7 percent that caused Greece, Ireland, and Portugal to need financial assistance in the past.

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