A senior Government minister has said proposals in Germany for a debt “redemption fund” could come to fruition depending on how the eurozone crisis plays out.

Such a move could dramatically reduce Ireland's overall debt burden.

Minister for Social Protection Joan Burton told RTÉ News that the euro was facing an “existential moment" and it was important that there was a clear outcome to the Greek elections.

Minister Burton said there were very interesting proposals coming from advisers close to German Chancellor Angela Merkel recently. 

One such proposal was the idea of a redemption fund.

This would involve eurozone states pooling their debt above 60% of GDP and refinancing it through low-interest bonds and agreeing to fixed repayment plans.

"We have to see what Germany's approach is," she said. "What does Germany want? What does Ms Merkel want?"

Ms Burton said there was also a lot of merit in proposals for a euro-wide banking union and euro banking guarantee.

She said that French president François Hollande's pursuit of a €120 billion euro stimulus plan was also very important to Ireland as new social and cohesion funds could help get people back to work here.