European Union finance ministers made a fresh attempt on Wednesday to reach an end-of-year deal on a single eurozone banking supervisory body aimed at restoring confidence in the battered currency bloc.

Talks last week ended inconclusively, with ministers failing to agree on issues such as the scope of the supervisor and measures to guarantee its independence.

Some diplomats on Wednesday expressed optimism that a deal would finally be struck, but analysts were ambivalent.

EU leaders had pledged to establish a legal framework by the end of the year, with full implementation of the supervisor by early 2014.

The supervisor, to be set up under the auspices of the European Central Bank (ECB), is also a prerequisite for ECB aid to struggling banks.

“Negotiations have stalled, to the point that we can no longer affirm whether the legislative framework for a banking union will be adopted as promised before the end of 2012,” said Frederique Cerisier of BNP Paribas, noting that it set a “disturbing” precedent.

But UniCredit chief economist Erik Nielsen was more upbeat, saying he was “not too concerned” about the impasse, as banking union had to happen sooner or later.

Failure to strike a deal this month would send a worrying signal to financial markets, warned Antonio Vitorino, the president of the Notre Europe—Jacques Delors Institute.

“Meeting the deadlines set for the establishment of the SSM (single supervisory mechanism) will be a milestone for credibility in the face of still highly volatile markets,” he said.

Diplomats expected at least some movement on Wednesday, including overtures towards German demands that national supervisors must still play a key role.

Berlin has been determined to keep its many small, regional lenders under national supervision, while states including France insist that the eurozone regulator should have ultimate oversight over all of the eurozone’s 6,000-odd lenders.

Germany also wants to see cast-iron measures ensuring that the ECB’s supervisory function does not interfere with the independence needed to set monetary policy.

The non-eurozone members want equal rights if they choose to join the supervisor, while Britain — one of a minority of states that will not join the euro — wants to ensure that euro “outs” do not lose influence in the European Banking Authority.

Last week’s talks also threw up questions about the legality of placing the supervisor under the auspices of the ECB, and whether this was permitted by the EU’s rulebook, the Lisbon Treaty.

The supervisor — one of several planned steps towards banking union, including the eventual setup of a common bank resolution fund — must be approved by all 27 EU member states.

Should the finance ministers again fail to agree, the issue could be picked up by EU leaders at a summit on Thursday and Friday, although some diplomats instead expected ministers to hold another special meeting before Christmas.