German news source Der Spiegel quoted (only in its German edition) during the weekend from a draft paper by DG Ecfin, the European Directorate General for Economic and Financial Affairs, according to which internal imbalances within the euro zone would weaken confidence in the euro and endanger the cohesion of the monetary union.

The problem, in the view of the European Commission, is the combination of rising deficits and weakening competitiveness in several countries, notably Ireland, Spain and Greece.

The Ecfin report also criticizes the surplus countries like Germany and Austria for failing to stimulate domestic demand, as they needed to deregulate the service sector, their tax systems, and credit constraints for the private sector.

The commission says the necessary adjustment in the deficit countries would likely cause an increase in unemployment, which is best countered by a policy of wage moderation.

It’s a fact.

The EU Commission is worried about those countries which have piled up enormous current-account deficits during the past few years as they benefited from low interest rates.

“Countries like Greece do not only bring their budget deficits under control, they also need to make a fundamental reorientation of their economic policy,” European Central Bank Chief Economist Juergen Stark said.

He added that the other European Union countries will not come to the rescue of Greece, noting “no country of the currency union is responsible for the deficits of another member country.”

ECB President Jean-Clause Trichet said that Greece as well as other euro zone countries “must do everything to put their budgets in order.”

From a broader perspective, the latest data of foreign-exchange reserve flows of China are of particular interest.

These data are indeed of great importance given the prominent role that Chinese forex reserve growth and diversification has played in guiding the upward performance of the euro in recent years.

Hence, that the net outflows from Chinese equities that have been registered since late December have accelerated sharply in recent days and may therefore point to a continued diminishing support for the single currency.

Indeed, net daily outflows from China currently are certainly comparable both in terms of size and consistency to those recorded at the height of the crisis in the fourth quarter of 2008.

Besides that, European Central Bank policymaker Ewald Nowotny said, regarding the comparatively high valuation of the euro, that “developments have not been disruptive up till now, but one has to observe this very carefully.”

“The traditional way to get out of recession has been upswing in export side. Here we see certain problems if there is a tendency of longer-term revaluation of the euro, not only vis-a-vis the dollar but also vis-a-vis Asian currencies,” he said.

Bottom line: There is practically no stronger euro to be expected in the near future.