Daniele Nouy has been appointed to head the euro zone's banking watchdog at the European Central Bank, the ECB has said, in a step towards closer financial integration in the bloc.

Ms Nouy will head the new institution being set up as part of a push for banking union which also requires a single mechanism to wind down non-viable banks to strengthen the financial system.

"The appointment of the Supervisory Board Chair marks an important milestone as the ECB establishes a single supervisory mechanism for banks in the euro area," ECB President Mario Draghi said.

Ms Nouy, who currently supervises France's banks and insurers, was appointed for five years and will start her new role on 1 January.

The ECB then expects to take up banking supervision on 4 November 2014.