Participants of the European Union summit agreed on the gradual formation of the banking union in 2013, Olivier Bailly, a spokesman for the European Commission, said.
Bailly wrote in his Twitter account that there had been an “agreement on a political framework for the end of 2012 and a gradual implementation in 2013.”
Following marathon talks at the previous summit in June, Eurozone nations agreed a new eurozone banking supervisor will be established before the end of this year, and that once this has been established then the European Stability Mechanism will be able to recapitalize failing banks directly, without the loans going via sovereign accounts and adding to the debts burdens faced at a nation level.
Diplomats say that the final deal that would commit EU’s 27 member states to agree on a supervising body for eurozone banks will be signed by the end of the year.
The decision will immediately relieve pressure on Spain which in June sought a 100 billion euro rescue for its troubled banks. It will also relieve pressure on Italy which is widely expected to be the next nation to seek EU assistance.