"The European Union needs to reinforce its architecture. This entails moving towards more integration, transferring more sovereignty, especially in the fiscal field," he said at a speaking engagement in Catalonia, The Daily Telegraph reported Saturday.
He called for "centralized control" over government finances.
"And this means a compromise to create a new European fiscal authority which would guide the fiscal policy in the eurozone, harmonize the fiscal policy of member states and enable a centralized control of [public] finances," he said.
Given the precarious position of Spain's banks, which are said to require billions of fresh dollars to remain in business, and the size of the Spanish economy -- fourth largest in Europe -- Rajoy's pronouncement could have a catalytic effect on the argument that a central authority would give eurozone countries more collective clout in their effort to save the euro.
Further integration of either the 17-member eurozone or the 27-member European Union would send investors the signal that the euro is here to stay, the Telegraph said.
German Chancellor Angela Merkel has already said further discussions over a more centralized authority over government finances would be worthwhile.
Rajoy has said he would support an region-wide banking union. Plans for recapitalization of Spain's struggling banks are expected by the end of June, he said.