LUDWIGSBURG, Germany—French President François Hollande warned that Europe is going through "a deep crisis," and urged Germany and other states to take "bold" steps toward deeper union, including the creation of a common budget and banking union.

"The time has come to deepen our union in order to allow Europe to have institutions and political decision-making processes suited to our economic challenges," Mr. Hollande said in a speech Saturday in this southern German town to mark 50 years of Franco-German friendship.

The...