Spanish Bond Sale to Test Markets Anew Ahead of E.U. Summit LONDON - Spain's government faces a new test of market credibility Tuesday as it seeks to sell more short-term debt a day after asking for a bailout of its banking sector - adding to the unsettled mood a few days before a key meeting of European Union leaders to discuss plans for greater fiscal unity, including the creation of a sort of finance ministry for the euro zone. The two-day summit of E.U. leaders, which begins Thursday, had raised some hopes of a breakthrough in the two-year-old debt crisis that has escalated to threaten Spain and Italy, both of which face borrowing costs many believe to be unsustainable in the medium term. But expectations for a short-term win have been lowered by Germany's chancellor, Angela Merkel, who has asserted that big changes such as issuing common debt will have to wait until countries that use the single currency have agreed to a broader revamp of the political architecture of the euro zone. Those changes could include surrendering more power over their budgets to European authorities in Brussels. The summit, which will be followed by a separate meeting of euro zone leaders on Friday, is expected to focus on agreeing on the elements of a banking union, which is seen as a concrete step even though it would not come into operation until 2013 at the earliest. Those elements would include a system to wind up insolvent banks, a central deposit guarantee fund, and a bigger supervisory role for the European Central Bank, among other measures. The leaders will discuss a paper on the future of the euro zone that keeps open the possibility of issuing common debt so long as it is a gradual process accompanied by robust fiscal discipline. The process towards the issuance of common debt, the document says, "would be accompanied with commensurate steps towards the pooling of risks." Under one scenario, national governments would have to agree on upper limits on their spending, in order to balance budgets, and on debt levels - and would then have to seek prior approval for exceeding those limits. "Under these rules, the issuance of government debt beyond the level agreed in common would have to be justified and receive prior approval," the document says. Subsequently, the euro area level would be in a position to require changes to budgetary envelopes if they are in violation of fiscal rules, keeping in mind the need to ensure social fairness. The document, which sketches the path to a banking union, also discusses the possibility of the ultimate creation of a new "treasury office," effectively a finance ministry for the euro zone. The proposals will be outlined in a paper written by the president of the European Commission, José Manuel Barroso; the president of the European Council, Herman Van Rompuy; the president of the European Central Bank, Mario Draghi, and the head of the euro zone finance ministers, Jean-Claude Juncker. Spain, along with Italy, is likely to press at the summit for more urgent action to lower borrowing costs, which are close to levels that might, if sustained, force the government in Madrid to seek a full bailout later in the year. Italy, whose borrowing costs have also risen on fears its economy could be the next under attack, has already proposed measures to reduce the difference in borrowing costs between euro zone countries. But Germany is determined that it should not finance a country that indulged in excessive spending, and the scale of the changes wanted by the government in Berlin has been made clear by the country's finance minister, Wolfgang Schäuble. "In an optimal scenario, there would be a European finance minister, who would have a veto against national budgets and would have to approve levels of new borrowing," Mr. Schäuble told the German magazine Der Speigel over the weekend. He added that such changes might also necessitate a referendum in Germany. But a big shift of power to Brussels would prove highly controversial for many countries inside the euro zone, none less than France, which fiercely defends its national sovereignty.