Top eurozone countries meet in Paris on Tuesday in whirlwind efforts to ensure that a summit this week launches the EU towards far great integration and stops debt contagion fires in Spain.
Ambitions for the summit are high, but financial markets are showing nervousness that the outcome in terms of credibility might again be disappointing.
European Union leaders due in Brussels on Thursday want to give the EU Commission the final say over eurozone national budgets and 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 a system which centralises power for the "financial sector, for budgetary matters and for economic policy."
In the report, EU president Van Rompuy says that "the euro-area level would be in a position to require changes to (national) budgetary envelopes if they are in violation of fiscal rules."
French junior budget minister Jerome Cahuzac told BFM TV and RMC radio that Paris, like Berlin, Rome and Madrid, had to share sovereignty over its 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.
On sovereign debt markets, both Spain and Italy had to pay sharply increased rates at bond auctions. If either country has to seek an EU bailout, the eurozone's financial aid reserves would be strained to, and maybe beyond, capacity.
The 17-nation eurozone is struggling to convince markets it can get to grips with spreading crises. The latest blows were a downgrading of 28 Spanish banks late on Monday and a call for help from eurozone member Cyprus, and a request from Spain for help for its banks.
Gekko Global Markets senior trader Anita Paluch reflected market sentiment by saying 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 and France, which have been pushing separate agendas which make financial discipline and growth their respective top priorities.
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 troubling new chapter in the eurozone crisis.
Cahuzac, speaking the day after the new French government said it needed to find up to 10 billion euros of budget savings, said on Tuesday that France will freeze one billion euros' worth of spending this year to meet budget targets.
Finance ministers from France, Germany, Italy and Spain were to meet here on Tuesday, along with EU Economic Affairs Commissioner Ollie Rehn.
EU crisis managers are trying to stabilise the eurozone banking sector to preserve confidence and prevent bank runs in countries like Spain and Greece.
A decision by the Moody's agency to slash the Spanish lenders' ratings came just hours after Madrid made a formal request for up to 100 billion euros ($125 billion) to bail out its troubled banking sector.
Spanish banking shares slumped in stock market trading after Moody's decision.
Madrid's own lowered sovereign credit grade was a contributory factor, Moody's added.
Meanwhile, Cyprus became the latest eurozone member to ask for financial aid for banks on the island which are heavily exposed to losses on holdings of Greek debt.
In lodging its request for rescue cash Cyprus did not specify how much it needed or whether the help was for its banks or a general government bailout.
In Italy, the business daily Il Sole 24 Ore said that Banca Monte dei Paschi di Siena, the world's oldest bank, might have to request more than three billion euros in aid, as Italy struggles to stave off debt crisis contagion.
Germany, the effective eurozone paymaster, said it would take on more debt than planned in the third quarter to meet its growing share of bailout bills.
Meanwhile, Europe faced demands from Greece's new three-party coalition government for different terms for its bailout, including a two-year deadline extension on reforms.
But Merkel's spokesman Steffen Seibert warned that no decision would be taken until an international team of auditors had assessed the state of Greece's economy.
The person tipped to become Greek finance minister turned down the post on Monday owing to what a spokesman said was a "chronic" condition, while Prime Minister Antonis Samaras was released from hospital with doctors orders to stay at home for at least a week to recover from eye surgery.