Britain's concerns about the integrity of the EU single market have been taken into account in proposals published today for new banking supervision rules in the eurozone, Downing Street said today.
The European Commission is proposing to give the European Central Bank the power to supervise all the banks in the 17 countries that use the euro and also be able to fine institutions.
In its proposal to resolve the eurozone financial crisis, the Commission called for the ECB to take over supervisory roles from national banking regulators in member states.
Prime Minister David Cameron backs moves towards closer "banking union" within the eurozone, but has demanded safeguards to ensure that any changes do not impact on the UK financial services industry or undermine the integrity of the single market.
His official spokesman said the Government will carefully examine the details of today's proposals before making a formal response.
But he said that the plans appear to recognise the concerns voiced by the UK.
"We have consistently argued that a banking union is an essential part of a single currency and, as the single currency central bank, the European Central Bank is the right organisation to take on that supervisory role for euro area banks," said the spokesman.
"That is at the heart of the proposals set out by the Commission today.
"We have also said that it is very important that banking union for the euro area must respect the integrity of the single market for the whole of the EU.
"I think that point is recognised and noted in what the Commission has published.
"We are not a member of the single currency and a banking union is part of a single currency.
"What we were arguing in the European Council in June was that banking union was an important step to create a stable single currency but it should be banking union for the eurozone, and not the EU. That is reflected in these proposals."
Under the Commission's plans, the ECB would be given the ability to issue or withdraw banking licenses in the eurozone countries, approve large mergers and acquisitions, investigate banks and impose financial penalties for breaches of the rules.
Before taking effect, the proposal needs to be approved by the European Parliament and by the heads of government of the 27 EU states sitting in the European Council.
It will be discussed by finance ministers of the 27 member-states, including Chancellor George Osborne, at a summit in Cyprus at the end of this week.