German Chancellor Angela Merkel on Wednesday said European Union members must be open to treaty changes to strengthen joint economic governance in the 28-nation bloc.
Merkel was speaking a day after starting her third term as leader of Europe's biggest economy and just ahead of a visit to Paris, followed by a two-day EU summit in Brussels.
Arriving for talks with French President Francois Hollande, Merkel hailed what she called a "new phase" in Franco-German relations.
"Together, we want to push Europe forward and make it a strong continent in the world," she said.
For his part, Hollande stressed the "Europe needs France and Germany to have a confident, strong and open relationship".
Earlier, Merkel had told the Bundestag lower house of parliament the EU needs to work toward more centralised financial and economic governance, where members can be compelled to meet certain fiscal targets, even if this requires changes to key EU treaties.
"Since the Lisbon Treaty we have a situation in Europe where everyone says, 'we can develop everything but we can't change the treaties'," Merkel said.
"I don't think that we can build a truly functioning Europe that way."
Hollande has rejected changing EU treaties, pushing for more pro-growth policies and less austerity within the existing European charters.
Other EU members are also sceptical about renegotiating treaties, which may require referendums, amid rising euroscepticism in many countries.
Merkel, making her case for evolving charters in the EU, said: "We have a situation in Europe where Germany is often accused of resisting certain developments. This is not the case.
"We are among those who say that we must, if treaties are nolonger sufficient, develop those treaties."
"Those who want more Europe must be ready for new rules on some competencies," she added.
Merkel was sworn in for a third term on Tuesday, almost three months after winning September 22 elections, leading a "grand coalition" with the centre-left Social Democrats.
Addressing the Bundestag, Merkel said that her new government wants for Germany, as a founding member of the EU, to continue "to take a responsible role and one that promotes integration in Europe".
Looking back at 2013, she said "Europe has made a fair bit of progress on the path to stability and growth", citing the banking union project, keeping the common currency competitive and the fight against youth unemployment.
"It could reap the first fruits -- I stress, the first," Merkel said, pointing to progress in Ireland, Greece and Cyprus.
But she said Europe's credibility had suffered because it had often pledged a lot and not done enough -- for example, failing to meet spending targets on research and development in order to stay innovative and globally competitive.
The aim now was to ensure that in future countries don't again plunge into crisis, as they have amid the sovereign debt and economic troubles of recent years, including by correcting some of the founding flaws of the EU, she said.
"We say this can be achieved if the necessary structural reforms can be demanded" from member states, Merkel said. "That means we must significantly strengthen the policy coordination... that has so far been non-binding."
She said at the moment, the European Commission sends each EU member reform recommendations annually.
"The member states receive these happily -- and here Germany is little better than others -- and then life goes on," she said.
"However, there is no obligation, and that's why we want to work toward treaty changes in future, on the European level."