Germany and France were seeking to paper over divisions on the governance of the eurozone yesterday after a proposal from Berlin for a European Monetary Fund set a vigorous debate across the European Union.

Nicolas Sarkozy, the French president, and Angela Merkel, Germany's chancellor, are preparing to present joint proposals this week for such a fund, which would be able to provide loans to eurozone members in financial difficulty, while imposing strict conditionality on the lines of International Monetary Fund rules.

The fundamental difference between them is whether such a plan would require yet another treaty change for the EU, after the prolonged paralysis caused by problems in ratifying the Lisbon reform treaty.

Ms Merkel made it clear that she was prepared to push for a new treaty on the grounds that the EU and the eurozone needed new tools to deal with a crisis such as the present situation in Greece.

"Without treaty change we cannot found such a fund," she said. "So we will need a treaty change."

But while French officials welcomed the German proposal for an EMF, they gave warning that it was a long-term project. There is no desire in Paris to overhaul the present EU treaties yet again.

In Brussels, the European Commission signalled its willingness to swing into action with a plan for a monetary fund, equipped with sufficient resources to assist highly indebted eurozone nations such as Greece. Commission officials said preliminary work was already in progress, and a proposal for an EMF could be ready by June, when EU heads of state hold their regular summit.

Olli Rehn, the European economic and monetary affairs commissioner, said such a fund would impose "strong conditions" on member state seeking its support. That would tally with the German view for very strict conditionality.

But divisions emerged yesterday in the German financial establishment, with an outspoken attack on the idea from Jürgen Stark, a member of the European Central Bank's executive boardCord embroidery fabric. He said that establishment of such a fund would breach eurozone principles and undermine public support for the euro and the EU.