German Chancellor Angela Merkel said Thursday the European Union's top financial official should have the power to veto the national budgets of member states.
Merkel, addressing the Bundestag lower house of parliament ahead of an EU summit beginning later in Brussels, said the EU's economics commissioner should have the authority to declare a budget "invalid".
"We believe, and I say that for the whole government, we could go further by granting the European level real rights to intervene in national budgets" that breach the limits of the EU's growth and stability pact, Merkel told lawmakers.
She added that "unfortunately" she knew some EU member states were not ready for such a step.
But she said that if a national budget could be declared invalid, "we would be at the stage of needing someone in the (EU) Commission who has the authority to do that" and that person would be the EU's economics commissioner.
On Tuesday, German Finance Minister Wolfgang Schaeuble called for the EU's Economic and Monetary Commissioner to be empowered to send back budgets to national parliaments.
Several hours before EU leaders gather in Brussels, Merkel outlined in an around 40-minute speech the position of Germany, Europe's top economy and effective paymaster, calling the euro "much more than a currency".
She pointed to the significance of the EU having been awarded the Nobel Peace Prize in the midst of a crisis that has at times posed a question mark over its future, rather than at other key moments in its history.
"This euro stands symbolically for the economic, social and political unification of Europe with great effect beyond Europe," she said.
The problems buffeting Europe have not arisen overnight and will not be resolved overnight either, she said highlighting a lack of competitiveness, some countries' debt problems and mistakes in the design of the euro.
But she said that strengthening the single currency was a process of steps and measures, some of which had already been taken.
"We can already clearly see the outlines of a stability union," she said.
She also said many countries were undertaking tough reforms or had introduced other programmes to tackle their problems, including Greece where she said the situation was "anything but simple".
Turning to Spain, she said the decision on whether Madrid sought rescue funds from the EU was the Spanish government's alone.
"We know that people in Spain, in Greece and in other affected member states, an awful lot is demanded of them," she said, adding however that results were also being seen.