Sparked by the Greece crisis, discussion of the EMF has gathered steam in recent days after it was floated by German Finance Minister Wolfgang Schaeuble in a weekend newspaper interview.

On Tuesday, Israel's interior ministry approved new housing units in Ramat Shlomo, a Jewish settlement in mainly-Arab east Jerusalem, which has been occupied by Israel since 1967.

Germany has strictly opposed a mechanism to provide aid to member states, fearing it would be a simple let out for those countries failing to keep to the agreed limits.