After months of negotiations, European Parliament is poised to move forward this week with a single banking supervisor to oversee the Eurozone's biggest banks.

Known as the Single Supervisory Mechanism (SSM), the initiative consists of the establishment of a single banking supervisory authority to oversee the 150 largest banks in the eurozone. The new authority would be housed under the European Central Bank, with its membership comprised of ECB representatives and national regulators. The goal is to have the new authority operational by the end of 2014. In addition to direct supervision of the largest banks, the SSM would also allow for the review of member states' regulators regarding smaller banks' supervision.

The legislation also would provide for the direct recapitalization of banks, which proponents say would end the troubled loop between banks and sovereigns. Non-eurozone member states would be allowed to join the SSM through cooperation agreements. The effort is part of the broader overhaul of regulations and supervision in the wake of the recent financial collapse.

A vote on the mechanism was put off for two days as the European Parliament and European Central Bank tangled over the new agency's transparency, Reuters and other news outlets reported. Members of parliament wanted to have access to minutes of the authority's meetings while ECB President Mario Draghi argued that would undermine the supervisor's independence and create the potential for leaks of confidential information. Draghi had proposed releasing only summaries of the group's meetings.

An ECB spokeswoman confirmed to Reuters that an agreement had been reached by Draghi and European Parliament President Martin Schulz, allowing the vote to be rescheduled for Thursday, 12 Sept. Under the compromise, certain members of parliament would be given detailed accounts of the supervisor's meetings on a confidential basis.

Internal markets commissioner Michel Barnier has called the SSM an important first step towards a centralized banking union. Barnier said the authority will prove to be “a great asset for financial stability in Europe.” He believes it will enhance regulators' ability to monitor the health of banks and ensure compliance with capital requirements and other regulations.