European leaders kicked off the last summit of a crisis-hit year to thrash out the euro\'s future Thursday, full of Christmas cheer after clinching deals on bank supervision and funding for Greece. Leaders hope to cap a triumphant week that saw the European Union win the Nobel Peace Prize by setting out ways to plug holes in the eurozone\'s construction that have been brutally exposed during the bloc\'s three-year debt crisis. Video showed leaders smiling and joking with each other, before EU President Herman Van Rompuy opened the meeting by saying: \"The worst is now behind us but of course much still needs to be done.\" Referring to the Nobel award, he added: \"We started the week well in Oslo. Let\'s finish it well here in Brussels with a further positive outcome.\" Hero of the day was Italy\'s Prime Minister Mario Monti, hailed for tough reforms that have brought Italy back from the brink of financial collapse but who announced last weekend he was throwing in the towel. \"Confidence has been returning in Italy\'s capacity to solve problems,\" said European Commission chief Jose Manuel Barroso. \"Let me praise Mario Monti and his government for this.\" At the talks, leaders will debate a report drawn up by Van Rompuy that proposes steps towards greater economic integration in the 17-nation eurozone, eventually with a common \"fiscal capacity\" and binding reform commitments. Following a summit that collapsed in failure only last month on the EU\'s seven-year budget, the atmosphere was noticeably brighter after ministers sealed much-heralded agreements on supervising big banks and aid to Greece. Greek Prime Minister Antonis Samaras exclaimed that \"Grexit is dead\", meaning the prospect of Greece leaving the eurozone was no longer possible after ministers released bailout funds to avert bankruptcy. After a buy-back programme designed to reduce Greece\'s debt mountain, Eurogroup head Jean-Claude Juncker said a first payment of 34.3 billion euros ($44.7 billion) would be flowing to Athens \"as early as next week.\" This instalment would go to help recapitalise Greece\'s crisis-wracked banks, to be followed by another 14.8 billion euros in the first quarter of next year. An ecstatic Samaras, who has pushed through painful reforms demanded by creditors, often in the face of violent protest, told reporters: \"Greece is back on its feet. The sacrifices of the Greek people have not been in vain. \"Solidarity in our Union is alive. Grexit is dead,\" Samaras added as he went into talks with EU conservative parties ahead of the two-day summit. \"Today is not only a new day for Greece, it is indeed a new day for Europe.\" Hours before the Greece deal, ministers charged the European Central Bank with the task of monitoring banks with assets of more than 30 billion euros or equal to 20 percent of a state\'s economic output from March 2014. The deal, which German Chancellor Angela Merkel said \"cannot be valued highly enough\", is the first step on the path towards a banking union and clears the way for EU bailout funds to recapitalise struggling banks directly. As she arrived for the talks, Merkel called the move a \"big step towards more reliability and trust in the eurozone\". The new Single Supervisory Mechanism (SSM) for the eurozone -- which Britain and Sweden will not take part in -- will mean the ECB directly supervising some 200 of the biggest of the estimated 6,000 eurozone lenders. ECB chief Mario Draghi hailed the accord as \"an important step towards a stable economic and monetary union, and towards further European integration\". More excitably, Barroso said: \"You remember, when we spoke about this some time ago, people said it will not fly. It is flying. It is happening.\" Merkel voiced some satisfaction as she looked back on a year of seemingly endless crisis summits, damaging market volatility and, at times, near break-up of the eurozone bloc. \"All in all, I want to state at the end of 2012 that we have achieved a lot. It was a very heavy year in terms of work but it was also a year in which we managed to make big progress.\" But, as ever with EU summits, jitters were never far away, this time in the shape of Italian political uncertainty. Italy\'s former leader Silvio Berlusconi has sown confusion by saying Wednesday he could abandon a re-election bid if Monti decided to run. Barroso said he had expressed \"very frankly\" to Berlusconi \"the importance of having stability in Italy, of keeping Italy on this path of stability and reforms\".