A European Fund to bail out countries?

Mr Juncker said that it's an idea worth thinking about as "Europe is lacking an instrument to deal with crisis events properly". However, "the EMF will not give us a watertight solution to Greece" he stressed.

 

 

Mr Trichet said the idea of an EMF could be investigated, but said he wasn't keen on "continuously setting up new mechanisms. Let's do the best with the current hardware; governments should behave properly in the first place".

 

In a meeting on 17 March, Mario Draghi, President of the Italian Central Bank and chair of the G-20 Financial Stability Board said such a fund "should always be considered as the icing on the cake" with the bulk of the work always being through fiscal consolidation. 

 

In the same meeting, IMF head Dominique Strauss-Kahn said a number of good, but different models, had been floated. "I would be happy to comment - if I knew what it was," he said.

 

"The IMF has no problem working with a regional institution, but there is a need of a multilateral institution overarching the whole system" Mr Strauss-Kahn said.

 

He didn't think an EMF would have stopped the crisis in Greece: "The Greek crisis was a fiscal crisis. The EMF is a distraction from the real issues. It would also take a lot of time to build. But the Greek problem will have to be addressed now."

 

 

We asked some MEPs from across the political spectrum what they thought.

 

Greek member of the Economics Committee Rodi Kratsa-Tsagaropoulou, of the EPP group, said, "I fully support the idea of setting up a European Monetary Fund that would intervene when a Eurozone country slides into serious trouble, like the current situation".

 

"The EMF would not be a new monetary entity but a supportive mechanism under strict and specific rules", she said. "We also have to promote better fiscal and economic policy coordination in the Eurozone in parallel to the compliance with the Stability and Growth Pact".

 

Socialist Udo Bullmann, a member of the Economic Committee and Parliament's Crisis Committee said, "an EMF could in the future take the wind out of the sails of speculative financial actors. The provision of credits by the fund must be linked to clear criteria. This way member states continue their modernisation efforts. But Europe doesn't necessarily have to wait for a monetary fund; Article 122 of the EU Treaty allows for aid to members of the Eurozone which experience difficulties due to external factors such as speculative attacks".

 

"If we want a common market and a common currency, we cannot afford to have 27 national economic policies. Important social, ecological and economic modernisation efforts must not be neglected right now," he added.

 

French Green Pascal Canfin said his political group is "in favour of establishing an EMF as a sovereign debt crisis resolution framework." However an "EMF per se is not a solution for another crisis but could be part of a prevention mechanism, if it implements adequate support for reformed policies by Member States intending to tackle the structural root of the crisis".