Such a union is needed if the 27-member European Union -- which is supposed to be an economic and political union -- is to learn the lessons of the sovereign debt crisis, commission President Jose Manuel Barroso said as the French central bank governor and chairman of an international "bank for central banks" called for a similar EU banking union.
Barroso told the Financial Times the EU needed to move beyond incremental measures and take "a very big step" toward broad financial integration.
"I think now we have conditions to go further that, frankly, we did not have before," he told the newspaper.
The banking union -- which would include an EU-wide deposit-guarantee organization like the U.S. Federal Deposit Insurance Corp., as well as a rescue fund paid for with bank levies -- could be achieved next year, Barroso said, adding he didn't think it would require EU treaty changes.
Germany, Europe's largest economy, has insisted such measures can only come about with a legal overhaul.
German Chancellor Angela Merkel has also expressed objections to sweeping reforms.
Adopting language Merkel uses to express those objections, Barroso said: "The European project has always made progress step-by-step. We should continue step-by-step, but now we need a very big step.
"Either Europe makes a step forward or there is a risk of fragmentation," he said.
His comments came the same day Bank of France Gov. Christian Noyer called for a banking union with the same general structure.
"We are all part of the same financial system. We all benefit when things go well, and we are all affected when something goes wrong," Noyer wrote in an op-ed piece in The Wall Street Journal.
"Our banks today are eurozone banks -- not German, Spanish or French banks. They can borrow from the European Central Bank anywhere; they can lend to any euro-area citizen or firm. Depositors can easily shift money from one country to another," wrote Noyer, who is also chairman of the Bank for International Settlements.
BIS, based in Basel, Switzerland, is an intergovernmental organization of central banks that fosters international monetary and financial cooperation and serves "as a bank for central banks," says its Web site.
U.S. Federal Reserve Chairman Ben Bernanke is a board member.
"As long as the whole euro area's financial health is vulnerable to problems in one country, negative feedback loops between sovereign and banking risks can materialize," Noyer wrote.
"We need to break this link between sovereign and banking risks to avoid renewing the dangerous spirals and contagion at the heart of the current crisis," he wrote. "To accomplish this, we need a euro-area structure responsible for deposit guarantees, banking supervision and crisis resolution."
No EU leader immediately commented on the two calls for a banking union, first broached by a couple of European leaders last month.
Barroso said the banking union possibility would be discussed at an EU leaders summit in Brussels June 28-29.
He cautioned his plans were not a substitute for separate, urgent measures to address current market turmoil -- they are to ensure the EU's long-term survival.
"But this is what the whole European integration process is about," Noyer wrote. "We have always been able to overcome crises and design appropriate answers.
"The times demand that we move decisively forward. Our work should begin right now."