UPDATE: EU Ministers Give Final OK to Create Joint Banking Supervisor 10/15/13
LUXEMBOURG- European Union finance ministers have approved the creation of a centralized banking supervisor for the bloc.
The European Central Bank will operate the new supervisor who will directly oversee the bloc's 130 biggest banks.
The so-called single supervisory mechanism is due to be operational late next year after assessing European banks' balance sheets to identify possible capital shortfalls. If the supervisor finds that a bank needs help, a bank rescue authority would step in to unwind or prop up ailing lenders.
However, EU finance ministers remain far from agreement on how to design and fund a bank rescue authority.
The aim of the EU's banking union is to make sure that a bank failure in one country does not threaten to overwhelm an individual state and, in turn, threaten the wider region's stability.