The Economic and Financial Affairs Council reached an agreement on the regulation conferring supervisory tasks on the European Central Bank, and the one which establishes the European Banking Authority. The President of the European Commission welcomed the agreement which considers as a crucial and very substantive step towards completion of the banking union.

The Council set out its position on two proposals aimed at establishing a single supervisory mechanism (SSM) for the oversight of credit institutions. The proposals involve two regulations: one conferring supervisory tasks on the European Central Bank, the other modifying regulation 1093/2010 establishing the European Banking Authority. This agreement will enable the Council presidency to negotiate with the European Parliament with the aim of adopting the legislation before the end of the year, in line with the October European Council's conclusions. In October 2012, the Council already agreed that establishing a Single Supervisory Mechanism is a priority for the Union.

The SSM will be composed of the ECB and national competent authorities. The ECB will be responsible for the overall functioning of the SSM. Under the proposals, the ECB will have direct oversight of eurozone banks, although in a differentiated way and in close cooperation with national supervisory authorities. Non-eurozone member states wishing to participate in the SSM will be able to do so by entering into close cooperation arrangements. The Council stressed that the ECB's monetary tasks would be strictly separated from supervisory tasks to eliminate potential conflicts of interest between the objectives of monetary policy and prudential supervision.

President of the European Commission, José Manuel Barroso, welcomed the agreement because he underlines it is a crucial and very substantive step towards completion of the banking union and a timely step forward in the integration of financial supervision for the euro area and for the other Member States which the Commission hopes will also participate. The October European Council asked the presidency to lead negotiations on the two regulations with a view to reaching an agreement before 1 January 2013, whilst indicating that work on operational implementation would take place during 2013.