EU Finance Ministers are still struggling to reach a formula on a key element of the proposed rules of the stability pact - the economic rules which will apply to states who join monetary union.
Despite success yesterday in completing most of the detailed preparatory work on the single currency for the Dublin summit next month, agreement on the stability pact still promises to be awkward.
The disagreement reflects important differences of opinion over the way the single currency should work, with Germany insisting that tough rules must apply to its members.
The pact will bind member states to continued monetary and fiscal discipline after the introduction of the euro. It will contain a definition of the "exceptional and temporary" circumstances under which member states may avoid fines.
The Germans are pressing for rules under which a state would avoid a fine only where it is in deep recession and the economy contracts at an annual rate of 2 per cent over four quarters.
Others argue that the rules must be more flexible. There was a strong feeling at the meeting that different conditions in different member states meant that a simple reference to a figure would not be acceptable.
Officials from the Commission and the Monetary Committee will now work on a formula which is likely to include a figure - probably 1.5 per cent negative growth - but will also explicitly leave the decision on a fine to consideration by ministers of the extent of the guilty country's previous re cord, or what has been termed her "ability culture".
German state finance secretary Mr Jurgen Stark, made it clear Bonn was prepared to see the negotiations continue beyond the Dublin summit and into next year and reiterated his warning that Germany would seek to negotiate the terms of the stability pact if it did not get a satisfactory deal.
Diplomatic sources were last night not confident that the issue would be resolved before the Dublin meeting but some suggested that an intervention on the matter by Chancellor Kohl at the summit might break the deadlock.
The Minister for Finance, Mr Quinn, was able to report agreement on the treaty basis of legislation needed to give the euro a legal status and ensure continuity of contracts, following the lifting by the Danes of their reservation.
