German Finance Minister Wolfgang Schaeuble has signalled a softening of his stance on a European banking union.

Speaking at a Berlin University, Mr Schaeuble said the euro zone should press ahead on the basis of current law without waiting for a controversial overhaul of the Lisbon treaty.

The banking union is seen as a crucial part of Europe's drive to overcome its financial and sovereign debt crisis.

In a first step, it involves the creation of a Europe-wide banking supervisor under the hood of the European Central Bank.

This is to be followed by a so-called resolution scheme to close or salvage struggling banks.

Just last month, Mr Schaeuble appeared to be pulling back on the issue, saying the European Union needed to consider treaty change before proceeding, due to the "doubtful legal basis" on which the project rested.

Those comments sparked a backlash from EU officials and German partners like France.

Today Mr Schaeuble struck a more conciliatory tone, calling banking union a "priority project" and promising to press ahead with it "quickly".

He said that while Europe needed institutional changes in the medium-term, it should not wait for this to solve its current problems.

"We must make the best of it on the basis of the current treaties, and where we do not manage to achieve things institutionally, then we will work inter-governmentally or even bilaterally," he said.

Germany, which holds elections in September, has in recent months stressed the need for caution and careful preparation in the drive for a banking union.

It is anxious about exposing its citizens to the liabilities of Europe's weakened banking sector.