EMF plan 'unhelpful': German central bank chief

(FRANKFURT) - The idea of a European Monetary Fund is "unhelpful" but could be welcomed if it cuts deficits, Germany's central bank chief said Tuesday, stressing that Europe should focus on existing debt rules.

"New institutions won't help if the existing ones are ignored," Axel Weber, who is seen as a possible successor to Jean-Claude Trichet at the head of the European Central Bank, told reporters at a press conference in Frankfurt.

"But anything that helps to stop deficits arising, that allows earlier intervention... is alright by me," he said, adding however that talk of such contingency plans for debt-riddled European nations was "unhelpful."

Germany, Italy and the European Commission have tentatively given their backing to a European version of the Washington-based International Monetary Fund, which provides emergency loans to countries in distress.

But there has been strong criticism from France and the European Central Bank, while German Chancellor Angela Merkel on Tuesday stressed that the fund would only work if "sanctions" are imposed to penalise spendthrift states.

-- Dow Jones Newswires contributed to this report --