BERLIN - Europe needs clear intervention rights when member states' national budgets violate EU rules, German Chancellor Angela Merkel said on Thursday, shortly before an EU leaders summit.

"We have made good progress on strengthening fiscal discipline with the fiscal pact but we are of the opinion, and I speak for the whole German government on this, that we could go a step further by giving Europe real rights of intervention in national budgets," Merkel told the Bundestag lower house.

She also said a proposal put forward by German Finance Minister Wolfgang Schaeuble to create a European currency commissioner was a possible way forward and that more European rights should be accompanied by a stronger European parliament.

Merkel advocated the creation of a European fund to invest in specific projects in member states which she said could be funded by a financial transaction tax.

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