The European Union has reached agreement on reforms to financial supervision, officials have said.

EU states and the European Commission agreed to create agencies that from next year are to oversee banks, insurers, and financial markets.

The deal must still be approved by European finance ministers and the European Parliament.

Europe’s move follows the sweeping Wall Street reforms that President Barack Obama signed into law in July.

It is hoped the agreements in Europe and the US will help stop a repeat of the financial crisis in which loose supervision of companies was blamed for contributing to problems.

Michel Barnier, European Internal Market Commissioner, said after the deal was agreed late on Thursday: “We have reached a crucial milestone. We have reached a political consensus on the creation of a European financial supervisory framework.”

The agreement also creates a European Systemic Risk Board with the task to look out for threats to Europe’s economy from the financial sector.