During negotiations which lasted till the early hours today at their last summit of the year in Brussels, the heads of state and government of the EU drew up an action plan to strengthen the European economic and monetary union.
They also expressed their resolve to improve competitiveness in Europe through closer coordination of economic policies and asked European Council President Herman Van Rompuy to present possible measures to boost growth and employment at the European Council meeting in June, next year.
"We have agreed on a road map for further development of the economic and monetary union" in the coming months, German Chancellor Angela Merkel said at the conclusion of their opening day's session.
They discussed what steps should be taken next after the EU finance ministers yesterday morning reached a deal to set up a single supervisory body for the euro zone's largest banks under the leadership of the European Central Bank (ECB) as the first step towards a European banking union.
In an effort to strengthen the economic policy coordination among the 27 member nations, the EU leaders agreed to finalise till next June details of agreements between the European Commission and member states on economic policy coordination and reforms to strengthen competitiveness, Merkel told a news conference.
They also discussed the possibility of setting up a "solidarity fund" to support those countries which are involved in spending cuts and other programmes to consolidate their budget and to stabilise their economies.
The leaders of the euro zone made it clear to their EU partners that all agreements they make for the euro zone are also open for countries outside the euro to participate as they did in the case of the fiscal pact on budgetary discipline and the non-euro states welcomed the offer, the chancellor said.
In a joint statement issued at the conclusion of their opening day