Italian president calls for European monetary fund

(BRUSSELS) - Italian President Giorgio Napolitano called on Wednesday for the creation of a European monetary fund to help eurozone nations in trouble.

"The European Central Bank (and) the European institutions are aware that there's something missing from our common tool box to tackle unforeseen and serious crises in one of the eurozone nations," Napolitano told a press conference at the European Commission in Brussels.

Asked whether he saw a need for a European, rather than international, monetary fund he replied that the current Greek crisis "demonstrates the need for such an instrument to prevent and deal with such crises."

Napolitano added that membership of the 16-nation eurozone brings with it "an obligation for (fiscal) discipline."

The idea of a European fund set up to support eurozone nations has previously been advanced by some economists and political figures.

European Socialists on Tuesday called for the creation of a such a fund, which they said should be managed by the European Investment Bank (EIB), to help Greece and others ward off speculators as they tackle budget crises.

Under their scheme the EIB, Europe's lending arm, would borrow from the market at a reasonable interest rate. Countries in crisis could then borrow these funds at a similar rate as others are able to do, the Socialists said in a statement.

Such a system would protect the eurozone against speculative attacks on sovereign debt and create conditions in which a sovereign default by any eurozone member state "is clearly judged impossible by the markets," the European Socialists said.