European Union finance ministers moved yesterday to crush speculation that the euro zone could break up after a second Italian government minister called for a return of the lira.
Luxembourg's prime minister, Jean-Claude Juncker, whose country holds the EU presidency, described any discussion of the euro zone breaking up as "absurd and senseless".
Two Northern League ministers in Silvio Berlusconi's government have blamed the euro for Italy's economic problems and called for a reintroduction of the lira. A German magazine reported last week that officials in the Bundesbank had discussed the possibility of a euro zone break-up and the return of the deutschmark.
Minister for Finance Brian Cowen said that there was no question of Germany or Italy even considering a departure from the single currency.
"Both the German finance minister and the Italian finance minister confirmed that there's no contemplation of that in government circles in either country. Such views would be highly unrepresentative of political thinking in those countries," he said.
Mr Cowen said that the success of the euro was in Ireland's vital economic interest and that European economic integration was essential for the country's economic success.
"From our point of view, the euro is our currency. It's important that it's in a healthy state. It's the framework within which we're doing all our work at the moment and for the future. I think it provides us with exchange rate certainty in terms of our tourism and investment and our trade... For us, it's simply not at issue," he said.
Mr Cowen acknowledged that the euro zone's biggest economies were under-performing but he insisted that the answer to such difficulties lay in economic reform rather than in abandoning the currency.
"I think everyone realises that it's not the currency that causes the problems. There are structural issues that need to be addressed in terms of labour market flexibility. There are issues in terms of getting more investment into these economies. These are real challenges, which these governments are seeking to deal with... Rather than trying to take the foundation stone away from the building, you have to build on the foundation stone and that is the stable currency that the euro now provides in the euro area," he said.
Speculation about the euro's future followed a sharp fall in its value after France and the Netherlands rejected the EU constitution in referendums last week. The French finance minister, Thierry Breton, said that he told yesterday's meeting of finance ministers that his country's No vote did not imply any loss of confidence in the euro.
"I made clear without any ambiguity our strong attachment to the common currency. The euro is the currency of France and it will remain so," he said.
The president of the European Central Bank, Jean-Claude Trichet, yesterday played down speculation about a cut in euro-zone interest rates. "We will continue to look very carefully at all the data that we will have, but I am not preparing for a rate cut."
The euro fell against other currencies this week after the ECB's chief economist, Ottmar Issing, said he did not rule out a rate cut. Euro-zone interest rates have remained unchanged at 2 per cent for more than two years.
Mr Juncker hopes to restore confidence in the EU at a summit in Brussels next week by agreeing a deal on the EU's next seven-year budget plan. France and Germany have signalled their willingness to compromise on the size of the budget and Britain's Tony Blair yesterday softened his language on preserving his country's budget rebate.
