Three agencies will be established to keep tabs on banks, markets and insurers next January.
A European Banking Authority will be based in London. Paris will be home to the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority will be in Frankfurt.
The UK’s share of the vote on ESMA will be only 8 per cent and will be held by the new Consumer Protection and Markets Authority. The EU will also establish a European Systemic Risk Board, an agency of the European Central Bank that will keep watch for threats to the economy such as property price bubbles.
To begin with, the power of the new financial sheriffs will be restricted.
As it stands, the new agencies can step in if EU rules are being broken or they can order national supervisors to take action in an emergency.
They will also have the final say in disputes between national agencies grappling with problems at an international bank.