BRUSSELS (AP) — The European Union's executive office on Wednesday said the 17-country eurozone needs a "banking union" that can centrally oversee and — if needed — bail out the sector, which has become a weak link in the continent's financial system.

Fears that the cost of bank rescues could cause governments to need bailouts of their own have been fueling Europe's debt crisis in recent months.

Spain is in a particularly bad situation because its banks are not only holding massive amounts of shaky government bonds but also sitting on huge losses on real estate investments. The country's borrowing rates have hit record highs this week as investors worry it does not have the money to save its banks. One of them asked for €19 billion ($23.6 billion) last week.

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