Is Euro Zone Really Back ‘On Track’?

French President Francois Hollande seems to think that the euro zone is "on track" to solving its crisis during yet another summit — but market observers are taking this with a pinch of salt.

Euro zone heads of state have agreed to complete the legal work on creating a single bank supervisor, the European Central Bank by the end of this year, earlier than expected. However, they omitted to explain how losses related to legacy assets will be dealt with — a key part of building a closer banking union.

The European Stability Mechanism, the bailout fund set up to replace the European Financial Stability Facility in the rescue of the region's struggling economies, won't be able to directly recapitalize banks until the regulator is in place. This is believed to be a key element of the long-term success of the single currency region.

Martin Schulz, president of the European Parliament and a German politician, told CNBC: "Looking to the real positions of the different member states and the difference of opinion of those who are within the euro zone, those out of the euro zone, those with the opt outs. ... It will be difficult."

He added: "We need to do the utmost to break this permanent speculation against some of the member states of the euro zone."

One notable omission from late-night discussions was the potential for Spain to request a bailout, one factor which has caused volatility in markets so far this year. (Read More: Spain in 'No Man's Land.')

The euro zone leaders will meet with their broader European Union counterparts Friday with plenty of key issues about the future of the currency to be hammered out — including the idea of a super-commissioner to oversee national budgets, the possibility of a joint budget and a new emergency fund.

"The 'vision-thing' on deeper integration of the monetary union will continue," Carsten Brzeski, senior economist at ING, predicted. (Read More: Cost of Euro Zone Exits? $22 Trillion.)

The announcement about banking supervision in the early hours of Friday morning, after ten hours of discussions, was dubbed a "messy compromise" by analyst Alex White at JPMorgan.

"The statement repeated the passage from the June Summit word for word — indicating how little progress has been made. While France and the periphery continue to see banking sector support coming early next year, the German vision still looks like it is based around a timeframe from 2015 and beyond," he wrote in a research note Friday.

Differences between France and Germany, the two biggest powers in the euro zone, over the timing of the new regulator seem to remain, with French President François Hollande optimistic that it could come into effect early in 2013. German Chancellor Angela Merkel sounded a more cautious note when talking to reporters.

German politicians are eyeing elections next year, in which opposition parties could court voters by arguing that Merkel has put Germany, one of the region's best-performing economies and its largest, on the hook for bailing out the rest of the euro zone. (Read More: Euro Zone Needs to Ask for Bill in German.)

"Nobody should be surprised the Germans or the relevant parties are looking for the best positions for the election campaign. That's normal," Schulz, who is a leading member of Merkel's main opponents the Social Democratic Party, told CNBC.

He reaffirmed that his party would not try to damage the euro .

"We are entering a very difficult campaign but... we will not allow an election campaign to damage the euro," Schulz said.

—By CNBC's Catherine Boyle; Follow Her on Twitter @cboylecnbc