EU draws up plans for euro rescue fund

THE European Commission is looking at plans to create a rescue fund for European member countries in a bid to prevent another major financial crisis in the future.

The fund, which would act in a similar fashion to the International Monetary Fund (IMF), would help to prevent future crises similar to Greece’s, said the Commission yesterday.

A spokesperson from the Commission said: “There are ongoing discussions within the euro area following the Greek case on how to improve the system, in particular through reinforced economic policy coordination and country surveillance.”

The Greek crisis sparked the talks within the eurozone on how the system could be improved at the same time as reinforcing policy coordination and country surveillance.

The idea was first raised by German Finance Minister Wolfgang Schaeuble over the weekend, who suggested the Commission set up the fund, which is understood to have already received strong support.

Currently there is no draft documentation but the Commission is expecting to present initial proposals in the coming weeks.

Full details of how the 16 eurozone members would fund it and how it would work remain unclear.

The spokesperson said: “What is clear is that the Greek case shows there is a case to strengthen the economic governance, its tools and to make sure something similar doesn’t happen again. We welcome such debate and do not exclude such an instrument.”

The news comes a week after Greek Prime Minister George Papandreou threatened to turn to the IMF should the European Union not provide the financial assistance he needs. His warning came on top of a spate of spending cuts, marking the toughest the country has seen in years.