European Central Bank Vice-President Vitor Constancio is being considered for the job of head of the ECB's new banking supervisory body, a German newspaper reported on Monday citing European Commission sources.

According to Handelsblatt business daily, the sources said Constancio, a Portuguese economist, could get the job provided he was totally committed to it and withdrew from monetary policy altogether.

The new body, that will supervise the euro zone's banks, would have its own board within the ECB to guarantee that there are no conflicts of interests between monetary policy and banking supervision, the paper wrote.

The EU's executive will publish its blueprint for the banking union on Wednesday.

The idea of a new banking supervisor was launched in June, when European leaders agreed to allow the euro zone's new rescue fund to inject aid directly into troubled banks.

German Chancellor Angela Merkel insisted that this only be permitted once a centralized banking supervisor, housed in the ECB, was in place.

Forging consensus on what this supervisor should look like is proving extremely difficult however and the EU faces weeks of hard bargaining before a banking union places the banks of the 17 euro states under the authority of the ECB next year.

The Commission for example wants the ECB to monitor a broad swathe of banks but the German government and the country's smaller banks are pressing for a more limited remit, focused only on those banks considered "systemically relevant".

According to Handelsblatt, the head of the new ECB banking supervisor will have to appear regularly before the European Parliament to deliver progress reports, thereby guaranteeing the authority's democratic legitimacy.