SANTIAGO, Chile (AP) — The head of the International Monetary Fund on Thursday praised a deal inked by European Union governments to create a single supervisor for their banks.
"I can only welcome the agreement that has been reached between the partners to set a timeline to agree on thresholds and to make progress on that journey toward banking union," IMF director Christine Lagarde told reporters during a visit to Chile's capital of Santiago.
"We regard this as one of the three pillars to reinforce the Euro zone — the currency pillar, the banking union pillar and the fiscal union pillar. On the banking union pillar clearly progress has been made yesterday and we salute it."
After a marathon session, EU finance ministers agreed on a deal that gives the European Central Bank extensive powers, including power to grant and withdraw banking licenses, investigate institutions and fine banks that fail to abide by the rules. It also paves the way for Europe's rescue fund to directly aid the euro zone's troubled banks.
Under the deal, banks with more than €30 billion ($39 billion) in assets supervised or those that represent a significant proportion of their national economies will be under the oversight of the European Central Bank.