Deepening the EU Political-Fiscal Union

German Chancellor Angela Merkel and French President Nicolas Sarkozy announced plans to deepen the EU political-fiscal union, with closer coordination of European economic policy as well as a constitutional obligation for each country in the euro-zone to balance its national budgets.

Sarkozy stated to reporters Aug. 16 following talks in Paris that he and Merkel want a "true European economic government", consisting of the heads of government of all 17 euro-zone nations, according to the Associated Press.

The new body would meet twice a year - and more frequently in times of crisis - and be led initially by Herman Van Rompuy, the President of the European Council, for a 2½-year term.

Sarkozy and Merkel stressed their commitment to defending the common currency, a cornerstone of integration on the continent.