Euro: Euro-zone finance ministers last week discussed with the European Central Bank (ECB) the possibility of an interest rate cut to halt the euro's rise against the dollar, it was revealed this weekend.
French finance minister Mr Francis Mer told journalists at the World Economic Forum in Davos that "we discussed this subject" at a meeting chaired by the Minister for Finance, Mr McCreevy, in Brussels last Monday.
Mr Mer said the ministers also heard a report from an International Monetary Fund official showing that euro zone growth and inflation is not as badly hit by euro strength as many economic models show.
"I don't know if he is right. If we are right, it would be very good news. You would expect that like the US, our economy shows we are more and more autonomous," he said.
Dutch finance minister Mr Gerrit Zalm hoped the Group of Seven finance ministers would make a statement similar to that issued by euro-zone ministers last week calling for exchange rate stability when they meet in Florida next month. "I hope confirmation that stability of exchange rates is the best thing for the world economy. If they would make a replica of the statement of the EU ministers of finance, that would be fine with me," he said.
Germany's deputy finance minister, Mr Caio Koch-Weser, complained that with central banks intervening to protect their economies from the falling dollar, Europe was the chief victim of exchange rate instability.
"If I am concerned about something it is that the euro alone has to bear the brunt of the fall of the dollar because many areas of the world are de facto linked to the dollar, be it through pegs or intervention," he said
ECB President Mr Jean-Claude Trichet restated the bank's commitment to stability in exchange markets and warned of the danger of the US budget deficit.
US vice-president Mr Dick Cheney dismissed European fears about the US deficit, insisting it was manageable and normal in current circumstances. "If you look at our deficit today, while it's large, it's not that large from a historic standpoint as a percentage of GDP. We think it is manageable, especially given the state we're in," he said.
