The European Union is considering creating a European Monetary Fund (EMF) in order to provide emergency funding to debt-hit Eurozone countries, a spokesperson for Economic and Monetary Affairs Commissioner Olli Rehn says.

The proposal was floated over the weekend by German Finance Minister Wolfgang Schaeuble, who said he was in favour of an institution with the experience and power of the International Monetary Fund, IMF. France and Germany are strong supporters of an EMF and the European Ccommission says it is ready to propose an instrument to bail out the 16 Eurozone countries. It is highly likely that Brussels will tie any financial aid to strict conditions such as budget cuts and economic reforms.
 

The move is in response to the crisis triggered by Greece's massive debts. The Greek deficit is threatening the stability of the currency. At the moment, the European Union can provide emergency financial aid to non-euro members but the 16 countries in the eurozone are not eligible.
 

Various EU treaties regulate the maximum national debt and budget deficit allowed by Eurozone countries but information provided by member states is not verified by an independent body. The European Commission also announced plans to investigate the possibility of creating an independent financial verification body.
 

Apart from Greece, Portugal is also experiencing massive financial problems and has announced a privatisation programme to help deal with its' budget crisis.