German Chancellor Angela Merkel on Thursday said she would be open to a future eurozone "solidarity fund" for crisis-hit nations, once a unified financial and economic policy is put in place.
But she did not define how such a body would look and stressed that Europe needed structural reform more than another fund in order to stay globally competitive.
The first priority was for eurozone countries to agree on "the content and substance" of joint economic governance, which would also have to be approved by national parliaments.
"In such a context, I could imagine a solidarity mechanism, tightly linked to conditions, for example in the form of a fund for the eurozone," Merkel told the German parliament.
However Merkel, who faces elections in September, stressed that Europe's biggest economy does not want to dole out money but make sure the entire bloc is economically competitive.
"I will say quite clearly: whenever Europe speaks of a solidarity mechanism, it is immediately increased and broadened, and in the end no-one speaks about the parameters for competitiveness anymore, but only about a new source of funding -- and this is something Germany won't stand for."
She said Berlin "insists that the problems in Europe and the eurozone are tackled at the root and solved step by step so that the monetary union will finally become a stability union.
"For that, in Europe, we need a solid financial policy, to boost growth through structural reforms, and more investment in education and research."
Speaking hours before the start of an EU summit in Brussels, she also again urged action against the European scourge of mass youth unemployment.
"We must give them a chance for the future, we owe them that much, especially since they are not responsible for the failures of recent years," said Merkel.
However, her top rival in September 22 elections, the Social Democrats' Peer Steinbrueck, charged that Merkel's austerity policies were to blame for Europe's mass job losses.
"Youth unemployment is a direct result of the one-sided savings drive being conducted in Europe," he told the chamber after Merkel's speech.
"The vicious circle of budget cuts and collapsing growth is unbroken."