9 Mar 2010

Brussels considers European rescue fund

3:11 pm on 9 March 2010

The European Commission is considering a rescue fund for debt-hit countries to bolster the eurozone's financial stability, prompted by the near-collapse of Greece's finances.

European policymakers are mulling a bailout body similar to the International Monetary Fund (IMF), which would provide emergency loans under strict conditions.

It would ensure problems in one state don't drag the eurozone down with it.

Germany and France are leading the move, the BBC reports.

German Chancellor Angela Merkel called a European version of the IMF a "good and interesting idea", but warned that a new European treaty may be necessary to create it, and help prevent a repeat of the Greek crisis.

France and Germany have resisted IMF involvement in Greece's financial woes.

The IMF monitors the economic policies of member countries and can provide financial aid in the event of a crisis.

Economic and Monetary Affairs Commissioner Olli Rehn will inform the full commission executive on Tuesday about the talks on the plan, and full details might be ready by early June, a spokesperson says.

Greece has initiated a number of austerity measures, including sweeping tax rises and deep cuts in public spending, to tackle a deficit which is more than four times the EU's limit.