VILNIUS, June 2 (Reuters) - The euro zone needs to agree on sanctions to make sure every member follows the rules to regain market confidence, Finland's prime minister said on Wednesday.
Greece has negotiated a 110 billion euro ($135 billion) rescue package with the EU and IMF to help it deal with its debt crisis, but the markets were gripped with fears of spill-over to over euro zone member states, driving the euro down.
"Today we have a lack of confidence...Markets do not trust that we are following our own rules," Matti Vanhanen told a news conference at the Baltic Sea States Summit.
He said sanctions were needed to punish those who are breaking the criteria agreed in the EU treaties or not following recommendations from the European Commission or the Council.
"One quite effective sanction may be if we cut payments to the member states, one sanction has been mentioned that you have no right to vote, or there can be also some other sanctions," he said.
"The result has to be that we can trust everyone follows the rules."
Germany, the biggest contributor to the package, wants to strengthen the enforcement of EU budget rules with stiffer penalties for rampant violators.
However, EU officials have said penalties including the withdrawal of voting rights in extreme cases already existed in EU treaties, and that leaders were already considering creating a stronger link between access to EU funds and compliance with the rules.
Vanhanen later also told journalists that he believed euro zone member states may come up with a decision regarding sanctions within a few months.
"I believe that during the next few months it is possible to find if we have strong enough political commitments to accept these sanctions," he told journalists.
"Actually, I think that the precondition for the Greece package was these sanctions," he added.
The euro
European Commission President Jose Manuel Barroso, who came for the Baltic Sea States Summit, played down any worries on Wednesday about the European Union's single currency.
"The euro is a strong and stable currency," he told reporters after meeting Lithuanian President Dalia Grybauskaite. (Reporting by Nerijus Adomaitis; Editing by Toby Chopra)