Top eurozone finance ministers meet in Paris on Tuesday in a last-minute effort to ensure that a summit this week launches the EU on far deeper integration and stops debt contagion from engulfing Spain.
Expectations are high and tension is growing ahead of the Brussels summit on Thursday, with financial markets wary the outcome might again be disappointing in terms of credibility.
French Finance Minister Pierre Moscovici said the high-stakes gathering in Brussels would not be "banal" and would tackle real issues including concrete proposals for deep EU-wide reform to solve the debt crisis once and for all.
To do so, the European Union's top officials want to give EU authorities more power over eurozone national budgets, and to establish central banking supervision across the single market, a top level report said.
A report drawn up by EU and eurozone leaders Herman Van Rompuy, Jose Manuel Barroso, Jean-Claude Juncker and Mario Draghi proposes to move "over the next decade" towards greater centralised power for the "financial sector, for budgetary matters and for economic policy."
In the report, EU president Van Rompuy said: "The euro-area level would be in a position to require changes to (national) budgetary envelopes if they are in violation of fiscal rules."
EU Commission president Barroso said in a speech that the dramatic shift being considered "should start with steps that can be taken immediately without a treaty change" such as banking union.
He said: "These would lead to longer term steps that may require such changes."
Some eurozone nations meanwhile seemed to be preparing the political ground at home for some sort of deal which would require giving up more powers.
French junior budget minister Jerome Cahuzac told BFM TV that Paris, like Berlin, Rome and Madrid, would concede sovereignty over the national budget.
"This is what we are talking about, budget solidarity in Europe which implies that not only that the French budget, but also the German, Italian and Spanish budgets be subjected to a review by all our partners," Cahuzac said.
Spanish finance minister Luis de Guindos, who as was due to attend the meeting in Paris later Tuesday with his counterparts from France, Germany and Italy, reiterated his call for tighter fiscal union in Europe
"The more euro and the more Europe there is, the better it will be for our country," he said.
Athens took a step forward meanwhile, naming former banker Yannis Stournaras as the country's new finance minister after his predecessor stepped down unexpectedly due to health concerns.
The 17-nation eurozone is struggling to convince markets it can get to grips with spreading crises.
On sovereign debt markets, Spain and Italy had to pay sharply increased rates at bond auctions as investors demand higher prices for the risks involved.
And stocks in London, Frankfurt and Paris ended flat on Tuesday after big falls on Monday. Milan dropped another 1.11 percent and Madrid lost 1.44 percent.
The latest blows to investor sentiment were a downgrading of 28 Spanish banks, hours after Madrid officially requested help for its lenders, and a rescue call from eurozone member Cyprus, the fifth nation in the currency bloc to ask for a bailout.
Eurozone finance ministers will hold a conference call on Wednesday to discuss the aid requests from Spain and Cyprus, a diplomat told AFP.
The source said that the Eurogroup had promised "to rapidly examine the requests from Spain and Cyprus, and that's what it will do."
Gekko Global Markets senior trader Anita Paluch said investors wanted "firm decisions supporting a long-term vision of a strategy that will work and stop this festival of powerlessness we have seen in the past two years."
Eurozone credibility depends on cooperation by its two biggest members, Germany which wants financial discipline and France which wants the emphasis on measures for growth.
German Chancellor Angela Merkel was expected in Paris on Wednesday for final consultations with French President Francois Hollande before the EU summit.
While neither has sought to mask key differences of opinion, both are aware that a failure to compromise could open a dangerous new chapter in the eurozone crisis.
At Barclays Capital, senior European economist Julian Callow commented: "It appears likely that there will be some high level agreement on at least some aspects of the draft plan for greater fiscal integration, while also moving more quickly towards establishing a 'banking union' at the euro area level."