Smith is frustrated by the current financial chasm that exists between Europe's elite clubs and Scotland's big two.

The Ibrox boss, who guided the Light Blues to the UEFA Cup final last season, wants UEFA to formulate a new European league involving big clubs from Scotland, Portugal, Holland and Scandinavia.

Smith believes such a league could run at weekends leaving Rangers to put out a B team to play in the SPL.

"Rangers and Celtic are two huge clubs who deserve to be in a better circumstance than they are in in Scotland," the Rangers boss said.

"There are a number of big clubs all over Europe who find themselves in the same position.

"We are nearly all hamstrung in terms of finance in comparison to the bigger leagues and few people are doing a great deal to try and equalise that.

"UEFA have got to help bigger clubs in small countries and there are a whole load of them out there, desperate to get closer to the likes of England, Germany, Spain and Italy in financial terms.

"It's the biggest problem in European football at the moment and it impacts on us at Rangers and Celtic.

"There should still be a Champions League but there should be a European league to rival ordinary domestic leagues.

"We should have a Saturday fixture in a European league.

"If Rangers and Celtic were offered the chance to play in a new European format I would agree to that.

"But that doesn't mean we couldn't have teams here.

"I would hope we could still have a team making a decent challenge in the Scottish league but it would give the other teams in Scotland an opportunity to win, which they are not getting for the same reasons we are not getting them European-wise."

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The concept of the Old Firm playing in a European league is not new.

Back in 2000, Celtic were keen to become involved in the so-called Atlantic League, which also included teams from Holland, Belgium, Portugal and Scandinavia.

The Scottish Premier League told PA Sport today they were not against Smith's suggestion in principle but warned it could take many years to establish such a concept.

"Over the past 10 years, we as a league have shown we're open to new ideas to help improve Scottish football," said an SPL spokesman.

"Indeed, when the concept of an Atlantic League was being worked on, we were actively involved in those discussions.

"However, we have signed a broadcast agreement with Setanta Sports until 2013-14 and there are no current discussions on this front.

"It's not something we see happening in the short to medium term."

The Scottish Football Association declined to comment on the matter, while Celtic boss Gordon Strachan insisted he was too focused on Saturday's Old Firm derby to give it much thought.

He said: "Too much for me to take in. Maybe another place, another time when we have time to relax.

"But, at the moment, we will concentrate on this game and this game only."