The European Union demanded Wednesday sweeping powers to override national budgets and proposed issuing joint eurozone bonds to help resolve and prevent a repeat of the debt crisis.
"Without stronger governance, it will be difficult if not impossible to sustain the common currency," EU Commission chief Jose Manuel Barroso said of his latest legislative proposals.
The head of the executive EU arm, Barroso presented radical plans that would allow him and Economy Commissioner Olli Rehn to decide to intervene in national policymaking.
Each said such new powers were a pre-condition for pooling eurozone government bonds, presented as a future safeguard.
Chancellor Angela Merkel immediately repeated Germany's opposition to joint eurozone bonds, saying the approach would not work -- just as investors shunned an issue of German 10-year bonds, considered the eurozone gold standard.
French President Nicolas Sarkozy voiced the conviction, which he said Merkel shared, that the 17 eurozone nations must "better integrate and that at the heart of that integration France and Germany must grow closer and be the base of stability in the eurozone and Europe in general."
"There is no other choice," he stressed.
Such closer integration would mean no over-reaching national budgets and no "fiscal dumping".
Countries with excessive budget deficits must make efforts to bring them down, he added, addressing a meeting of French mayors in Paris.
However the Netherlands, which backs stronger budget policing, meanwhile warned that plans for fiscal convergence also face an "uphill struggle."
Without naming the objectors, Finance Minister Jan Kees De Jager said: "There are those who resist further discipline."
The proposals, which concern only the eurozone at this stage, must now journey through the EU's 27 member states and the European Parliament.
Barroso argued that to complement democracy at the level of national parliaments, for instance in the setting of annual budgets, a "democracy of the EU" also had to be given its say.
Otherwise, he said, Europe would "hand sovereignty to markets."
The EU has rules on annual deficits and cumulative debts but these have been trampled over for years by its governments.
This time, the Commission wants the power to send inspectors in to finance ministries around Europe, and demand changes it believes better meet the needs of the common good before funds are legally allocated.
Now the Commission wants states to set up independent councils using external forecasting to agree on spending, taxation and other budget-shaping reforms.
The EU wants to institutionalise audits of troubled nations -- like the missions in Greece or Italy -- before bailouts become necessary.
Rehn said the right to intervene in a eurozone state's public finances would be awarded when the Commission and the European Central Bank (ECB) determine that financial stability is at risk.
Germany wants to go further and empower the European Court of Justice to pursue the worst offenders.
However Germany is staunchly against jointly-guaranteed eurozone bonds, believing they are not the answer to the eurozone debt crisis either in the short or long-term. Finland and the Netherlands also came out against eurobonds.
Merkel said she found it "extremely worrying" and "inappropriate" that the Commission was pressing ahead with eurobonds proposals, underlining: "This will not work."
German Finance Minister Wolfgang Schaeuble said "we won't take that path."
As Europe's biggest economy, Germany would be liable for the lion's share of pooled borrowings, and would see its ultra-low borrowing costs rise.
While Germany has been largely insulated from the difficulties weaker eurozone countries have had in raising funds, on Wednesday it had a shock when it was able to place only 3.6 billion euros' ($4.8 billion) worth of its benchmark 10-year "Bund" from a total of 6.0 billion euros on offer.
The borrowing rate remained low, but Austria's central bank head and European Central Bank (ECB) governing council member Ewald Nowotny called it an "alarm signal".
Germany and France have also sparred over recent days over having the ECB become a lender of last resort in order to resolve the debt crisis.
EU leaders are expected to debate the legislative package and related ideas at an early-December summit.