The European Commission said on Monday it would propose to create a European version of the International Monetary Fund (IMF) to help debt-hit countries like Greece.

The Commission, the European Union (EU)'s executive arm, was " ready to propose such a European instrument," Commission spokesman Amadeu Altafaj Tardio told reporters at a daily press conference.

He said the Commission is now negotiating with eurozone governments on the plan and aimed to find an agreement on the details by the end of June.

The proposal to set up a European Monetary Fund gained support after the Greek debt crisis destabilized European financial markets and undermined confidence in the euro.

Analysts said the crisis exposed severe defects of the euro zone, including lack of economic governance in the single currency club and no collective solution to prevent a possible debt default in a member like Greece from threatening overall stability.

"We are in discussion with the countries of the eurozone. This is about ways and means to be more effective in pre-empting ( financial crises) and surveillance" of economic policies, Tardio said.

He said EU Economic and Monetary Affairs Commissioner Olli Rehn would "inform" his colleagues in the Commission on Tuesday of ongoing "discussions" on the issue.

In an interview with Financial Times Deutschland published on Monday, Rehn had floated the proposal to set up an IMF-style fund in the EU. But he stressed financial aid given through that body would be linked to "strict conditions."

(Xinhua News Agency March 8, 2010)