Italy in favour of a European Monetary Fund

“The monetary union will sooner or later have to be based on common elements… in my opinion a European monetary fund, an insurance mechanism against the shocks of the labour markets, shared budget resources,” Pier Carlo Padoan said.

“If this does not happen, the monetary union will remain stuck in the middle of the river… and risks being hit by a more violent wave and being washed away,” he said in the wake of the economic crisis which left several members at risk of crashing out of the eurozone.

“It is what economists call 'risk-sharing', the sharing of risks which has made the monetary union stronger over the years… sharing resources, both financial and political,” he said at a press conference.

Padoan's comments followed calls earlier this year from Portugal for the creation of an EMF to take over the role played by the Washington-based International Monetary Fund during the economic crisis.

Portugal, which had a full EU-IMF bailout in 2011, says an EMF would mean countries in trouble – like Greece — would only have to deal with one institution rather than relying on the approval of national parliaments.

The idea for an EMF was first put forward in 2010 and initially endorsed by Germany and France as a potential rescue fund to help member countries cope with future financial troubles, but critics said it risked undermining rather than enhancing EU stability.