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STRASBOURG, France (Reuters) - The European Central Bank should take a core role in supervising all banks in the euro zone, European Commission President Jose Manuel Barroso said on Wednesday, outlining what he said was a "quantum leap" in the move towards a banking union.
"The Commission is presenting legislative proposals for a single European supervisory mechanism," Barroso told the European Parliament.
"This is a quantum leap - the stepping stone to a banking union.
"The single supervisory mechanism proposed today will create a reinforced architecture, with a core role for the European Central Bank," he said.
"Supervision must be able to look everywhere because systemic risks can be anywhere, not just in so-called systemically relevant banks."
The proposed banking union foresees three steps: the ECB firstly getting the power to monitor all euro zone banks and others in the wider European Union that agree to the oversight; the establishment of a fund to close troubled banks; and a fully fledged scheme to protect citizens' deposits across the euro zone.
Reporting By John O'Donnell; editing by Rex Merrifield