FRANKFURT (Reuters) - The euro zone's bailout fund, governed by its finance ministers, should set the terms of future rescue packages and enforce fiscal rules, taking over some of the European Commission's tasks, Germany's central bank said on Monday.
Germany has been looking to exert greater control over money spent to help Europe's weaker economies - a sensitive theme in a country that is the biggest contributor to the budget of the fund, known as the European Stability Mechanism.
The Bundesbank would like the ESM to assess the economic prospects of countries applying for a bailout and identify their financial needs.
"The program implementation could be monitored also by the ESM in future," the Bundesbank said in its July report.
The ESM was created in 2012 as a 'firewall' fund to lend money to countries in distress, provided they accepted certain conditions. It has made loans to over-indebted countries such as Greece.
But the terms of the bailouts have so far been negotiated by a troika comprising the Commission, the European Central Bank and the International Monetary Fund, which would also monitor the country's progress.
The Bundesbank said a beefed up ESM could also take over as an "independent fiscal authority" for the euro zone, in charge of assessing economic developments and compliance with budget rules.
(Reporting By Francesco Canepa; editing by John Stonestreet)