The European Commission has said it supports creating a European Monetary Fund (EMF) to help eurozone countries facing balance-of-payments difficulties.

“The Commission is ready to propose such a European instrument for assistance, which would require the support of all euro area member states,” a spokesman for Olli Rehn, the European commissioner for economic and monetary affairs, said.

He said the Commission would present a formal proposal in the “next few months”.

The spokesperson said that the fund would prevent a repeat of the Greek debt crisis, which has shaken investors’ faith in the stability of the eurozone. He said that the fund would improve “the ways and means” at the EU’s disposal for supporting countries in difficulty.

The Commission does not envisage, however, that the EMF will be set up in time to help Greece with its present difficulties. “This is all about making improvements for the future,” the spokesperson said.

Greece is battling to reduce a budget deficit of 12.7%, which it has pledged to cut by four percentage points this year.

The Commission said that the details of how the EMF would work, and what legal form it would take, were being discussed with eurozone governments. “There is nothing detailed on the table, but [there is] a clear determination to act,” the spokesperson said.

Issues under discussion include what kind of shareholder structure the fund should have, and the legal basis that should be used to set it up. The spokesperson said that the fund’s operations “would be based, of course, on rigorous conditionality”.

The spokesperson stressed that the EMF would not be a rival to the International Monetary Fund (IMF). France, Germany and the European Central Bank have strongly rejected speculation in recent weeks that the IMF could offer budgetary support to Greece, saying that it was for the eurozone to manage its own affairs.

The IMF is currently providing balance-of-payments support to Romania, Latvia and Hungary (all non-eurozone countries).

“We are not talking about competing with the IMF here,” the spokesperson said. “There is no pride at play.”

EMF proposals

Wolfgang Schäuble, Germany’s finance minister, said in an interview with Welt am Sonntag newspaper on Sunday that he would present proposals for a European monetary fund soon. He said that the eurozone needed an institution “for its internal stability”. This new body would not compete with the International Monetary Fund, he said, but would benefit from the IMF’s experience and have comparable powers to the fund, he said. He said that accepting financial assistance from the IMF would be an admission that the eurozone countries were unable to solve their problems by themselves.

Schäuble said he was in favour of “stronger co-ordination of economic policy” in the EU and the eurozone. Finance ministers should identify “openly and honestly” problems in individual members of the eurozone draw conclusions. The European Commission should also issue firm “early warnings” when there are developments which affect the competitiveness of eurozone members.

Asked whether speculators were to blame for the problems facing Greece and the euro, Schäuble said that speculation was “not the cause of the problem” although it could make it worse. He said that the EU and the members of the G20 should work together to ensure more transparency on markets for insuring credit against defaults, including so-called credit default swaps. The minister said that national governments should take steps to prevent the “excesses of speculators”, highlighting the fact that he had announced measures to bank naked short-selling where investors sell instruments they do not hold anticipating being able to buy them later at a lower price.