VIENNA, Dec 12 - European Central Bank Governing Council member Klaus Liebscher said on Friday that the euro's exchange rate was in line with its long-term average and that all central banks naturally took an interest in having a strong currency. When asked to comment on the euro's recent moves in foreign exchange markets, where it hit fresh records above $1.22 this week, Liebscher declined comment. But he did say the level now was not too far out of line. "The exchange rate that we currently have, without going into the daily rate, is one that is in line with long-term averages," he told reporters. "Every central banker will say that they are interested in a strong and stable currency," Liebscher added. Turning to the recent European Union decision not to sanction France and Germany even if they did not reduce their budget deficits by as much as promised, Liebscher said this could mean all states -- not just budget trespassers -- had to pay. "You shouldn't underestimate that the sins of individual countries can mean higher interest rate levels that punish all members," Liebscher said.
He later specified he was referring to bond rates in capital markets, not to official ECB interest rates. It was essential that maintaining price stability should be stated as one of the EU's overriding goals, Liebscher said, commenting about the EU constitution, on which government leaders are starting final negotiations on Friday. "That is a mistake, if we are apparently saying goodbye to stability policy," Liebscher said, referring to a proposal to drop 'non-inflationary growth' as one of the main EU targets -- a move that the ECB says might contain risks to its policy. Neither was there a reason to change the rules for fiscal discipline laid down in the EU's Stability and Growth Pact. "The ECB's position is that (the pact) does not need to be changed, because it is in order and it is flexible enough. The pact is alive." Liebscher also repeated the ECB's view that its benchmark interest rate, now at a 2.00 percent record low, was not standing in the way of faster euro zone growth. "We believe that the current interest rate level is appropriate... and certainly not an obstacle for growth," Liebscher said.||