Brussels: Finance ministers from the European Union have agreed to hand the ECB the authority to directly supervise the euro zone's biggest banks and intervene in smaller banks at the first sign of trouble, a news wire has reported.
"We have a deal," said an EU official, sending the euro to a session high in Tokyo of 1.3080 against the US dollar.
After three years of piecemeal crisis-fighting measures, agreeing on a banking union lays a cornerstone of wider economic union and marks the first concerted attempt to integrate the bloc's response to problem banks.
The new system of supervision should be up and running by the end of next year, although ministers agreed that could be delayed if the ECB needed longer to prepare itself.
The plan sets in motion one of the biggest overhauls of any European banking system since the financial crisis began in mid-2007 with the near collapse of German lender IKB.
The onus is now on EU leaders, who meet in Brussels on Thursday and Friday, to give their full political backing.
With Agency Inputs