European Central Bank (ECB) President Mario Draghi hailed the "great progress" made "for a better banking union" on Thursday, after the European Union agreed to complete the region's banking union.
Negotiators agreed to create a new agency to shut euro zone banks that are too weak to survive and a fund to help cover the costs, according to a draft agreement.
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All-night talks ended a stand-off between the European Parliament and euro zone countries over the new scheme, completing the second leg of banking union after supervision by the ECB.
"It's a very good agreement, its progress...We need a mechanism which is properly funded and the agreement actually improves on the pre-existing funding, and it's also a clear reference to enhanced borrowing capacity from the market by the fund," Draghi told CNBC on Thursday.
"The decision-making mechanism is also swifter and more operational so it's an improvement on that front too."