European Union leaders have finally agreed to create a single eurozone banking supervisor, revealing that the post will come into effect in 2013 as it moves towards establishing a banking union.
The next step is to establish a working legislative framework at the start of next year, followed by full implementation sometime in the spring.
The deal is considered to be a compromise between Germany and France, who have been at loggerheads over what is the most effective course of action in restoring calm on the continent.
This supervisory mechanism, which will be led by the European Central Bank (ECB), will allow the EU to intervene in any bank within the eurozone and inject cash into poorly performing financial institutions.
According to officials, all 6,000 banks in the eurozone will come under the supervision of the ECB by 2014 at the latest.
“Tonight, I have the confirmation that the worst is behind us,” Francois Hollande, prime minster of France, told reporters at a press conference.
“We are on track to solve the problems that for too long have been paralysing the eurozone and made it vulnerable.”
He added that if the European Summit in December backs up this decision, if Greece is able to find a lasting solution and Spain recovers its funding mechanisms, then “we will be done with a situation which weighed on markets and on the confidence in the eurozone”.
Even this is not without its challenges. The sheer scale of administering scrutiny and management of thousands of banks across many countries is in itself a major task, as well being time consuming and labour intensive.
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