SANTIAGO, Chile (AP) â¿¿ The head of the International Monetary Fund on Thursday praised a deal inked by European Union governments to create a single supervisor for their banks. "I can only welcome the agreement that has been reached between the partners to set a timeline to agree on thresholds and to make progress on that journey toward banking union," IMF director Christine Lagarde told reporters during a visit to Chile's capital of Santiago. "We regard this as one of the three pillars to reinforce the Euro zone â¿¿ the currency pillar, the banking union pillar and the fiscal union pillar. On the banking union pillar clearly progress has been made yesterday and we salute it." After a marathon session, EU finance ministers agreed on a deal that gives the European Central Bank extensive powers, including power to grant and withdraw banking licenses, investigate institutions and fine banks that fail to abide by the rules. It also paves the way for Europe's rescue fund to directly aid the euro zone's troubled banks. Under the deal, banks with more than â¿¬30 billion ($39 billion) in assets supervised or those that represent a significant proportion of their national economies will be under the oversight of the European Central Bank. Lagarde also lauded Chile for being one of the strongest economies in South America. She said the IMF expects the Andean country's 2012 economic growth at 5.5 percent, as robust domestic demand offsets weaker exports. "It's one of the best students in the class," Lagarde said about Chile's economy and the government's ability to keep unemployment at historic levels and inflation controlled at below target of 3 percent. "It has enjoyed robust growth for the last decade. It has a strong economic policy framework and it has now reinforced the economy resilience in the country in the face of potential external shocks coming from the United States, the European Union and potential volatility of the price of commodities."