The European Union reached a landmark deal on Thursday to make the European Central Bank the bloc's top banking supervisor, giving EU leaders greater confidence that they are gaining the upper hand over the euro zone's debt crisis.
EU finance ministers forged a deal on the single
supervisor in the early hours of Thursday after marathon talks. Leaders will give their stamp of approval at a summit starting later in the day, their last of 2012, and also discuss closer fiscal ties for their troubled currency area.
After a hectic year of crisis management, during which Greece had a close brush with the euro zone exit, getting an agreement on the first stage of a banking union is a victory for the EU and is a bold step towards pooling sovereignty.
"The importance of the deal cannot be assessed too highly," German Chancellor Angela Merkel, Europe's most powerful leader, told parliament in Berlin before heading to Brussels.
But there will be no time to relax. The next stages of banking union - creating a resolution fund for winding up troubled banks and coordinating deposit guarantees to protect savers - will be a tougher fight.