German Chancellor Angela Merkel says the proposed European banking supervisor could be in place some time in 2013.
The idea of a banking Tzar was advanced at the EU leaders’ summit in Brussels on Thursday after pressure from France to shore up the currency bloc’s lenders.
Ahead of the second day of talks, Merkel said the mechanism must ready before eurozone banks are allow to directly tap EU rescue funds.
Germany is keen that the new supervisor has powers to block national budgets that breach agreed limits on state spending.
European Commission president Jose Manuel Durao Barroso said it would be legally possible for non euro area member states to come under the same supervision.
The idea of a ‘super commissioner’ for banks was first mooted in the summer, the first step towards effective banking union, which many economists say is needed to overcome the euro debt crisis.
Our correspondent in Brussels, Audrey Tilve, said: “This leaders’ summit had been described as just a first step with no concrete decisions. It took several hours of negotiations to make progress on the banking supervisor concept.”