A new banking supervision scheme for the European Union is necessary and feasible by the beginning of 2013, EU financial services commissioner Michel Barnier said Saturday.
"I think it is necessary and possible, we have worked seriously all summer, since the decision of the heads of state in June," he told journalists during an economic forum in Italy.
Barnier is to unveil plans to set up a single banking watchdog for Europe, decided in principle at the last EU summit, at a meeting of the European parliament in Strasbourg on Wednesday.
"We are at the beginning of September, we are making this proposal very soon ... so that finance ministers and the European parliament can approve before the end of the year, for integrated supervision to be effective and operational at the beginning of next year, he said.
According to a 33-page draft of the plans drawn up in Brussels and put online by Italian business daily Il Sole 24 Ore, the European Central Bank will have the power to grant and withdraw banking licences, previously the preserve of national supervisors.
The creation of a common banking supervisor is part of a deal that will allow the bloc's rescue funds to directly lend to stricken banks instead of passing aid through countries and adding to sovereign debt problems.
It is a first step towards a banking union and part of wider moves towards fuller economic and political integration which the summit judged necessary to break the vicious circle driven by the eurozone debt crisis which has brought the region's economy to a standstill.
The proposal is controversial, reducing the role of the London-based European Banking Authority which was set up in the wake of the 2008 global financial crisis.
It has been opposed by among others Britain, home to the financial centre of the City of London where big eurozone banks have major interests.
Despite Barnier's optimism, the legislative proposals face many months of hard bargaining among governments and then the European Parliament.
The Frankfurt-based ECB would also monitor all sorts of measures, from capital buffers and liquidity to public disclosure.
Its spot-check powers would include the right to require the submission of documents, examine and take records, interview staff, and conduct all necessary on-site inspections, which may take place without prior announcement.
"Naturally it's not a matter of exercising this supervision in detail from Frankfurt (but) we're going to work towards a system whereby the central supervisor will have an overview of every bank," Barnier said.
"Naturally daily supervision ... must be exercised by the national supervisor" in each country.