The European Central Bank (ECB) has warned against making any change to the wording of the Stability and Growth Pact or the EU treaty articles covering Economic and Monetary Union.
The ECB president, Mr Jean-Claude Trichet, said, however, that some improvements could be made to the way the pact's rules are implemented.
"Our position is that the treaty should not be changed; the secondary legislation, the wording of the Stability and Growth Pact, should not be changed but the implementation of that secondary legislation and the treaty could be improved," he said.
Mr Trichet was speaking in Frankfurt yesterday after the ECB's Governing Council left interest rates unchanged at 2 per cent.
The ECB's intervention follows a suggestion by the Economic and Monetary Affairs Commissioner, Mr Pedro Solbes, that the pact's rules needed to be changed. "After the experiences of the first five years, I want to improve the pact. The stability pact has shortcomings and weaknesses. In economically difficult times, the pact seems too restrictive and sometimes the rules of the pact appear too rigid," Mr Solbes said this week.
EU finance ministers oppose an early reform of the pact but Mr Solbes wants to press ahead with proposals for change later this month.
Mr Trichet said that all available information suggested that the euro-zone's economic recovery was under way and that the outlook for low inflation and improved economic growth was good.
"Looking ahead, the external environment of the euro area should continue to develop favourably. In particular, robust real GDP growth in our major trading partners' economies can be expected to support foreign demand for euro-area goods and services, while export growth may be dampened somewhat by the decline in price competitiveness.
"The conditions for an improvement in domestic demand are also favourable. Investment activity should not only profit from global trends in demand, but also from companies' efforts to enhance productivity and profitability, from the low level of interest rates and from generally favourable financing conditions.
Growth in private consumption, which has so far remained rather subdued, can also be expected to recover in line with an increase in real disposable income," he said.
Mr Trichet declined to anticipate any discussion of exchange rate volatility at this weekend's meeting of G7 finance ministers in Florida. He repeated that the ECB's immediate concern was the stability of the exchange rate but he added that the long-term strategy of a "strong and stable" euro had not changed.
The ECB president acknowledged that stronger domestic demand was the key to boosting growth in the euro zone and he said that consumers should be reassured by structural reforms in Europe's biggest economies.
