Schaeuble had previously said that treaty changes would be needed to establish a common eurozone resolution authority, which is considered one of three pillars for a banking union. It would come alongside a joint supervisor - to begin work next year - and an eventual shared deposit guarantee scheme.

"Of course we need institutional changes in the long term. But, of course, we cannot wait - given the sluggish pace (of change) we have in Europe - until we have achieved treaty changes," Schaeuble said.

Instead, he said workable solutions must be found on the basis of existing treaties, and through cooperation between governments.

Schaeuble's statement indicates that German resistance to the plan could be fading, which could be key to implementation.

In Brussels, meanwhile, European Commission President Jose Manuel Barroso said the bloc's executive was on track to present plans for a single eurozone resolution authority next month.

Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, said time was pressing, as the first task of the single banking supervisor would be to review the quality of banks' assets.

"The outcome of that asset quality review we don't know yet. But it might be worrying," he said, warning, "Just exposing problems in banks and not having an answer how to recapitalize banks ... that will be very dangerous."

The resolution mechanism must "ensure that those who have profited from a bank's risk-taking also bear the cost," said Dijsselbloem, who is also the Dutch finance minister.

"A clear hierarchy of claims will need to be agreed in this context," he said, adding that deposits of up to 100,000 euros (131,000 dollars) should be safeguarded.

Eoin Treacy's view This article once again highlights the void that exists in Europe between politics and policy. On the one hand politicians are forced to engage in the drama of whatever is currently animating public opinion in their respective home countries, not least election timetables. On the other they are engaged in a nation building exercise for the Eurozone which is likely to have far reaching implications for their citizens. A federal Europe is the logical conclusion to the Euro project since a currency cannot logically survive with one monetary policy and 17 fiscal polies without a flexible transfer system and oversight of budgets.

The absence of a banking resolution corporation for the Eurozone has been a considerable hurdle for the EU's administrative body because governments were forced to take over private sector debts in order to preserve the banking system. Although a number of key politicians have claimed that the “bail-in” of Cypriot depositors did not constitute a precedent, at Fullermoney we see this as the only possible conclusion. As with the FDIC in the USA, a bank default resolution corporation in Europe would protect deposits up to a limit and funds above that level would be at risk in a default scenario.

While this is a new departure for Europe it highlights the need to differentiate between local deposit taking institutions and those engaged in the global capital markets. Despite a great deal of talking about the need to downsize the financial sector, not much has been done in either Europe or the USA to separate these very different businesses from each other.