Brussels, 31/01/2000 (Agence Europe) - On Monday morning, after a meeting lasting longer than expected (ending well after 11.00 a.m.), the Finance Ministers of the euro area made a point of announcing -in what was not presented as a formal statement- their "common understanding" of the situation of the euro, which is losing more ground in relation to the dollar. The full text of this statement follows.
"The Euro 11 Ministers and the ECB share the view that growth is now very robust in the euro area and is increasingly rooted in domestic demand. As a consequence, the euro has potential for appreciation, firmly based on growth and internal price stability. A strong economy goes along with a strong currency. Fiscal consolidation will be continued. Ministers share a common commitment to strengthen the structural reform process, so as to ensure a high and non-inflationary level of growth in the euro area."
Duisenberg says the ongoing weakness of the euro is a risk for stability
At the press conference concluding the Ecofin Council, Mr Pina Moura denied that the weakness of the euro is due to insufficient European growth. "Growth is strong, very strong, and becoming stronger from one quarter to the next", said the Council President. He added that growth could improve even further if structural reforms were made. For the Portuguese Finance Minister, the key is the fact that the euro has high growth potential, a point of view shared by Commissioner Pedro Solbes, who says there is no "clear relationship" between a "well defined monetary policy" and the exchange rate. In contrast (and even though Mr Pina Moura asserted that the "common view" of the eleven Ministers was shared by the European Central Bank), ECB President Wim Duisenberg said the euro's "ongoing weakness" was a "risk for stability", explaining: "The exchange rate is important in monetary strategy. It is an important factor in evaluating the risks of monetary stability." These remarks give some credence to reports that the ECB could raise rates at its meeting on Thursday. Belgian Minister Didier Reynders expressed the view that the Eleven were going "to have to learn to live in silence", the euro being an "international currency on which views must not be expressed all the time". He confirmed that the euro had a potential for appreciation, as the euro area is characterised by "strong growth and the will to transform it into sustainable growth through budgetary follow-up, a policy of reduction of costs and structural reforms".
The Council also approved, as expected, its conclusions (very positive on the whole) on the stability programmes submitted by Finland, Ireland and the Netherlands and the convergence programmes of Greece and Sweden. EUROPE will report further tomorrow. For creation of the high-level tax group, see page 11.