Limited banking union can buy time, German finance minister writes BERLIN (Reuters) - Germany's finance minister has called for a "two-step approach" towards European banking union, writing that a limited "timber-framed" union, set up without changing European treaties, would buy time to create a future "steel-framed" union. In an opinion piece for the Financial Times, Wolfgang Schaeuble wrote that today's EU treaties provide a foundation for the new single banking supervisor but not for a central resolution authority to restructure or wind up failed banks. "As the rescue of Cyprus has shown, we need predictability about when shareholders and creditors - and in what order - would be called upon to bail in or wind up a bank," he wrote. In June last year European Union leaders committed to a banking union but since then deep cracks have emerged in the visions they have of the scheme, with Germany in particular raising doubts about its overall feasibility. While the first step - to create a single bank supervisor under the ECB - looks set to be in place by mid-2014, a second pillar, a "resolution" agency and fund to close failed banks, is in doubt. "Limited treaty changes would not just provide a safe legal base for a European resolution authority; they could create a better separation between supervision and monetary functions in the ECB," Schaeuble wrote. Amending the treaties takes time. Luckily, the alternative is not between a legally shaky resolution authority now and the postponement of repair work on the banks. A two-step approach, he continued, could start with a resolution mechanism based on a network of national authorities. "Instead of a single European resolution fund - which the industry would take many years to fill - such a model would lean on national funds, which already exist in several member states," he wrote. A banking union of sorts can thus be had without revising the treaties ... this would be a timber-framed, not a steel-framed, banking union. But it would serve its purpose and buy time for the creation of a legal base for our long-term goal: a truly European and supranational banking union. Group of Seven finance officials meeting in Britain agreed on Saturday to redouble efforts to deal with failing banks. Reporting by Alexandra Hudson; editing by Andrew Roche