FRANKFURT (MNI) - The creation of a European monetary fund, as proposed by the European Commission to deal with government credit problems, could undermine incentives for fiscal consolidation and weaken public support for the euro, according to ECB Executive Board member Juergen Stark.

"Such a mechanism would not be compatible with the working principles of monetary union, in which each country is responsible for its public budget and thus for its debt," Stark wrote in an opinion piece for the German business daily Handelsblatt.

"It would be the beginning of financial redistribution in Europe, which could become very expensive, give the wrong incentives and burden countries with solid public finances," he warned. Rather than change the behavior of countries with lax fiscal policies, it "would undermine public acceptance of the euro and the EU."

Instead, Stark called for tougher enforcement of the EU's Stability Pact and the creation of an independent council of experts to monitor countries with excessive deficits and advise the Commission and the Eurogroup of EMU finance ministers.

The "alarming" state of public finances today will bring "enormous challenges" in the coming years, Stark said, warning of political pressure on central banks with less independence than the ECB to monetarize debts through inflation.

Unless decisive steps to counter deficit trends are taken "as quickly as possible, i.e. already this year or in 2011 at the latest," the crisis could intensify with far-reaching consequences, he predicted.

"Greece has now introduced important, courageous and credible measures to deal with its budgetary and structural problems," he said. "The determination of the Greek government merits recognition and should also help calm down the markets."

"Financial aid from third parties would only bring a short breather," he said. "It would not reduce the need for adjustment over the longer term nor bring a return of market confidence."

Stark's comments counter recent statements from German Finance Minister Wolfgang Schaeuble and Chancellor Angela Merkel, who have expressed support for a European monetary fund.