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27 European Union finance ministers have announced a deal to set up a pan-European regulation system at the start of next year. It will oversee the banking industry and insurance companies. The move reflects a major breakthrough in EU's financial reform, after it was held up by indecision and disputes among the bloc's countries.

EU finance ministers gathered in Brussels on Tuesday for a monthly meeting. They agreed to a sweeping overhaul of how to police the bloc's financial industry. The historic reform establishes three financial sheriffs to oversee national agencies such as Britain's Financial Services Authority.

However, the region's economic leaders failed to reach a consensus on how to impose levies on banks. The EU's executives suggests countries use some revenue from the bank levies to set up emergency funds. The British finance minister opposed this idea, but France said it would support such a tax if others around the globe were to follow.

Christine Lagarde, French Finance Minister said "It is technically feasible, this is actually what the International Monetary Fund said, it is practically difficult, it is politically desirable and it is financially variable."

At the meeting, the ministers agreed to submit future budget plans for review by EU authorities. Possible sanctions for countries that do not respecting EU budget rules were also discussed.

Olli Rehn, EC Commissioner for Economic & Monetary Affairs said "This is a major improvement of our economic governance architecture. The cycle, the economic policy cycle is reinforced by prior coordination which will help us to correct macro economic imbalances."

Three years after the start of a financial and economic crisis, the EU has made a bold step forward.

The latest forecasts suggest there will be 1 percent growth in the EU this year and 0.9 percent in the 16 eurozone countries.

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