Leaders from across the European Union (EU) have taken a significant step towards the creation of a banking union, it has emerged.
The European Council confirmed yesterday (18 October) that following discussions between the continent's senior officials, a legislative framework has been drawn up to establish a single banking supervisor in the eurozone.
It has been decided that the basis of this body will be in place as of 1 January 2013, with the panel beginning its work later in the year.
"In the light of the fundamental challenges facing it, the Economic and Monetary Union needs to be strengthened to ensure economic and social welfare as well as stability and sustained prosperity," the European Council noted.
Under the terms of this new scheme, the supervisor will hold sufficient power to enable it to intervene on the actions of any bank in the economic bloc.
Recently, Jose Vinals of the International Monetary Fund explained it is vital for European policymakers to clearly commit to a banking union in order to "restore confidence" in the sector.
By Asim Shah