"I call for a federation of nation states, not a superstate," Barroso said in his state of the union speech in Strasbourg, France, home of the European Parliament.
"A deep and genuine economic and monetary union can be started under the current treaty, but can only be completed with changes in the European Union treaties," he said.
His proposal was not met with universal acceptance among the 27 members of the European Union, where individual national identities are strongly protected.
The New York Times reported Wednesday that the proposal would give the European Central Bank authority over all 6,000 banks in the eurozone.
The ECB would have the authority to fine the banks and to grant or cancel their business licenses, the Times said.
"We must not allow the populists and the nationalists to set a negative agenda," said Barroso, who said the changes need to centralize banking authority could be accomplished by Jan. 1, 2014.
In Berlin, Germany, Chancellor Angela Merkel questioned the ability of one regulator to oversee 6,000 banks.
"It is not acceptable if every bank is to be controlled, but not every bank can be controlled. It is about quality and not quantity," she said.
On the other hand, "A swift agreement would help to challenge the perception that governments in the euro zone never reach agreement on anything without squabbling about it for months on end," said Ken Wattret, the chief eurozone economist in London for the French bank BNP Paribas.
Notable deaths of 2014 [PHOTOS]