The European Union's executive says it will propose the setting up of a rescue fund within the euro-zone, as one of several instruments to avoid a repeat of the Greek crisis.

The idea of creating a European monetary fund was floated at the weekend by German Finance Minister Wolfgang Schaeuble, who said he favored a body that commanded "the experience of the International Monetary Fund and similar executive powers,” the Reuters said.

"The Commission is ready to propose such a European instrument for assistance which would require the support of all euro-area member states. These should be based, of course, on rigorous conditionality. And I would like to tell you too that, in parallel, the Commission is preparing a communication on reinforced economic policy co-ordination and country surveillance. You probably heard commissioner Rehn referring to this in past weeks. All in all, the idea is that these kind of cases, as the Greek case, should not happen again," the agency quoted Commission spokesman Amadeu Altafaj as saying.

Mr Altafaj added that there was a clear sense of determination to improve economic governance across the euro area.

The spokesman stressed that it was too early to say whether the fund would be just a financial instrument or a new institutional body with a separate staff and budget. Since it might take time to set up such as fund, it will not be used to help Greece in its current fiscal problems.

He added it was also premature to say whether the creation of the fund would require changes to the European Union's treaty, which would require unanimity from the 27 EU countries.

Ideas are discussed for the time being, including with the European Central Bank, involved an instrument for the 16-nation zone, but other EU members could also end up being embraced by it, he said.