The German Chancellor, Gerhard Schroeder, has joined a growing controversy over the traditional independence of the German Central Bank, the Bundesbank.

Mr Schroeder gave his support to a campaign by his finance minister, Oskar Lafontaine, for a cut in interest rates by calling on the Bundesbank to abandon what he called a one-sided focus on currency stability.

Addressing a trade union conference in the western city of Duisburg, he said the bank also had a responsibility for employment and economic growth.

Mr Schroeder rejected accusations that his government was undermining the independence of the Bundesbank.

Yesterday the leader of the Dutch Liberal party Hans Dijkstal -- the second largest in the governing coalition -- voiced the fear that the new centre-left government in Germany could create financial instability in Europe.