EU leaders will discuss the move towards a full banking union for the region later.
They will consider a timeline for the direct recapitalisation of European banks by the European Stability Mechanism (ESM).
It comes after a successful meeting last night ended with agreement on a single banking supervisor for Eurozone banks.
The aim is to bolster the Euro and prevent future banking failures.
The agreement in the Council will enable its rotating presidency - which is currently Cyprus - to negotiate the package with the European Parliament with the aim being to adopt the legislation by the end of the year.
The proposal contains 2 regulations: one confers supervisory tasks on the European Central Bank (ECB), while the other modifies the existing regulation on the European Banking Authority.
The SSM will be composed of the ECB as well as national authorities.
"The overall aim is to restore confidence in the banking industry. The establishment of the SSM (Single Supervisory Mechanism) is a necessary precondition for the European Stability Mechanism to contribute directly to bank recapitalisations, rather than doing so via national treasuries as is currently the case. Such a development will enable the vicious circle between banks and sovereigns to be broken" said Cypriot Finance Minister Vassos Shiarly who chaired the meeting.
Watch the press conference here
The member states whose currency is not the Euro will be able to participate in the mechanism through close cooperation arrangements.
Tasks for the ECB
The ECB will be responsible for the overall effective functioning of the SSM.
It will have direct oversight of the euro area banks but the supervision will be differentiated and the Bank will carry it out in cooperation with national supervisory authorities.
The ECB will assume its supervisory tasks within the SSM on either March 1st 2014 or 12 months after the entry into force of the legislation - whichever is later.
The SSM is the first step towards an integrated 'banking union' which includes components such as a single rulebook, common deposit protection and a single bank resolution mechanism.
Speaking to reporters Taoiseach Enda Kenny admits that it may take some time for the details to be worked out.
