Germany's Schaeuble pushes EU economic union
Germany has called on countries using the euro to take decisive steps to bring about closer fiscal integration.
Berlin wants the EU's 27 countries to consider pooling more economic sovereignty at a summit in Brussels which begins on Thursday.
French President Francois Hollande says an end to the eurozone crisis is "very close" and wants a deal agreed on the first stage of a banking union.
But Germany argues that the proposed deadline is unrealistic.
The proposal for a single banking regulator was agreed at the EU's June summit.
But Berlin says there will be no final decision in Brussels because of concerns about plans for the regulator to supervise an estimated 6,000 banks across the eurozone.
Germany wants to continue regulating its financial institutions and is unhappy with a plan eventually to hand the European Central Bank full supervisory control.
Banking union - Brussels' 3-stage plan
- Single supervisory mechanism (SSM)
- Joint resolution scheme to wind down failing banks
- Joint deposit guarantee scheme
Instead, German Finance Minister Wolfgang Schaeuble has proposed a more powerful role for the EU Economic and Monetary Commissioner in regulating national budgets. Chancellor Angela Merkel is understood to back his idea.
The commissioner should have the ability to veto a budget if it breaks deficit rules, the finance minister argues.'Not only the Germans'
BBC Europe correspondent Chris Morris says that in setting out plans for full fiscal union, Mr Schaeuble has set out a fairly ambitious negotiating position.
The French are unpersuaded and wary of treaty change. Yet it is the direction of travel that matters. Europe - particularly the eurozone - is moving towards closer integration”
The finance minister's plan would require a convention to be set up next year in order to change EU treaties, but many eurozone countries believe other priorities should be addressed first, our correspondent says.
"We are all taking part in this solidarity, not only the Germans," Mr Hollande said in a newspaper interview.
European Commission President Jose Manuel Barroso warned on Wednesday that a lack of convergence towards a closer union was "nourishing populist debates ultimately to put an end to this project".
"It is clear that the euro area needs to evolve to a fiscal union... and ultimately a political union," he told the centre-right European People's Party congress in Bucharest.
The Brussels summit will take place against a backdrop of calmer European stock markets than in previous meetings and less concern over the debt crises in Spain and Greece.
Although Greeks are set to hold a general strike on Thursday, the Athens government and its international creditors are said to have reached a deal on the austerity measures needed before the next bailout instalment is handed over.
"I am confident we are doing everything we have to do in order to get it soon so that we can move towards recovery," Greek PM Antonis Samaras said.
Although there is growing speculation that Spain will soon ask for eurozone help in tackling its debt crisis, Madrid has seen its borrowing costs fall and may not ask for any aid at all.