• France forward joins from Monaco with option to buy for reported £166m • Mbappé: ‘It is with great joy and pride that I join Paris Saint-Germain’

Paris Saint-Germain have signed Kylian Mbappé from Monaco on an initial season-long loan in a deal that could make the 18-year-old the second-most expensive player in history.

The France forward has been linked with a host of top European clubs this summer, with Real Madrid initially confident they had won the race to sign him last month. Mbappé has instead opted to stay in Ligue 1, with PSG confirming the agreement to sign the 18-year-old contains a clause to complete a permanent deal in 12 months’ time for a fee believed to be around €180m (£166m).

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“It is with great joy and pride that I join Paris Saint-Germain,” Mbappé told PSG’s website. “For any young person from the Paris region it is often a dream to wear the red and blue jersey and experience the unique atmosphere of the Parc des Princes. I really wanted to be a part of the club’s project, which is one of the most ambitious in Europe. Alongside my new team-mates, I intend to continue my progression while helping the team achieve the very big objectives it has set itself.”

PSG had been locked in talks with Monaco and Uefa over the past week to try to reach a deal that would not contravene financial fair play rules after they signed Neymar from Barcelona for €222m (£198m) this summer. An agreement was eventually reached on Sunday night, although confirmation was delayed due to a disagreement over the structure of the deal.

The PSG president, Nasser al-Khelaifi, welcomed the arrival of Mbappé, who was born and raised in the Parisian suburb of Bondy before moving to Monaco in 2013.

“It is with a lot of emotion and satisfaction that I welcome Kylian Mbappé to the Paris Saint-Germain family. It was essential for French football that we keep and help develop such a great talent in our championship,” he said.

“Among players of his age, he is without doubt the most promising in the world due to his immense technical, physical and mental qualities. Since his emergence at the highest level, he has earned an excellent reputation as a young talent who is very respectful, open, ambitious and already very mature.

“Under our colours, in the midst of truly great players, Kylian will continue his progression in a way that will also benefit the French national team in the months and years to come. With his arrival, more than ever, our supporters will have plenty to cheer about.”

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Mbappé’s arrival caps an unprecedented summer of spending as PSG attempt to assert themselves at the top level of European football. Whether that will attract any attention from Uefa over its FFP rules remains to be seen, although there were reports in Spain on Thursday that Real Madrid and Barcelona have already lodged formal complaints with European football’s governing body.

PSG were fined for breaking FFP rules in 2014 after a sponsorship deal, arranged with Qatar’s tourist body, was deemed to have been of insufficient value to match the £167m PSG received for it. Last week the Uefa president, Aleksander Ceferin, said that it would punish clubs “severely” if they do not comply with the rules.

“I am very serious,” he said. “We will try to help [the clubs understand the rules]. We will try to advise them on FFP. But if they don’t comply we will punish and we will punish severely.”