France and Germany have called for ''true economic governance'' for the eurozone in response to the euro debt crisis.
At a joint news conference in Paris on Tuesday, Chancellor Angela Merkel and President Nicolas Sarkozy urged much closer economic and fiscal policy in the eurozone.
Ms Merkel said that further integration would be a ''step-by-step'' process.
They also advocated a tax on financial transactions to raise more revenue and seek to create a eurozone governing body.
They want bi-annual meetings of the 17 heads of the eurozone governments, chaired by the president of the European Council.
Ms Merkel again played down the chances of introducing ''eurobonds'' - jointly guaranteed debts of the 17 eurozone governments - as a solution to the crisis.
The idea has been advocated by Italian finance minister Giulio Tremonti as well as billionaire investor George Soros as a way of providing cheap financing to struggling governments while also incentivising them to put their finances in order.
But Ms Merkel said she only saw such a move coming at the end of a long process of fiscal union.
Instead, she proposed that a requirement for eurozone members to balance their budgets should be enshrined in each of their constitutions.
The BBC reports markets reacted negatively afterwards with some investors saying that they were expecting bigger announcements.
In New York, the Dow Jones industrial average fell 1.3%.