Minister for Finance Michael Noonan said today European Union governments must "get their economies into shape" to ensure the viability of the euro region.

"The euro is as solid as a rock, the issue is who is in and who is out and can everyone stay in," Mr Noonan told the Dáil today. "That is what the debate is about and everybody has to get their economies into shape so that they can all participate."

Mr Noonan said he has stressed to European colleagues the need for Ireland and bigger euro area states to be protected by a "firewall" from further contagion from Greece.

"The problem isn't the euro, the problem is with the euro zone," said Mr Noonan. "The euro is a very solid currency."

Meanwhile, German chancellor Angela Merkel held talks in Brussels today with European Commission president Jose Barroso as financial shares rose amid speculation that euro zone policy makers were working on plans to boost bank capital to contain the region's debt crisis.

After the meeting, Mr Barroso treaty changes to achieve even closer European integration will “probably” be necessary to cope with the economic crisis.

He said the EU was putting in place a raft of economic plans which should reassure markets, including stronger euro zone regulation and supervision, a quadrupling to €440 billion of an existing bailout fund and a tax on bank transactions.

But more might need to be done and it might require treaty change, he said - something Dr Merkel said last month was necessary to get the EU out of the debt crisis.

“We may need treaty change for more integration if current mechanisms are proved not to be enough," Mr Barroso said. “We are not proposing to have treaty change to avoid decisions we have to take now, so it cannot be a way of postponing that. But yes, probably in the future we may have to have treaty change, and it is a good indication for so-called markets and investors that we are looking for forward integration in the euro area, and not less Europe.”

The remarks came hours after British foreign secretary William Hague warned Conservative eurosceptics of a long wait if they thought treaty change could be a chance to negotiate the return of powers from Brussels.

He told BBC Radio 4's Today programme that major treaty change was not on the table at the moment. "Don't run away with expectations that there is about to be some major treaty change, these things take years to negotiate and then to ratify in other countries," he said.

British chancellor George Osborne suggested a few weeks ago that there could be agreement within a year or two on changes to allow greater financial integration within the euro zone.

Mr Barroso, speaking at a press conference with Dr Merkel, said Europe needed “renewal” to cope with the crisis. “Europe is at a crossroads. The question is do we roll back our achievements or make it a time of renewal," he said.

“Only through more Europe and a more committed European leadership can we renew our common capacity to act to ensure Europe counts in the world by promoting its social market economy. Renewal requires leadership and determination - so, yes to a more united Europe, strong committee institutions working in close co-operation with our member states."

Dr Merkel said the question was what Europe of the future should look like.

“Member states have transferred some powers to Europe and the commission uses those powers and this is European reality - we wish to act together for the benefit of all our citizens and we should support the union, especially at a difficult time like this.”

On the Greek crisis, she said the country had to remain part of the euro area and be given the chance to “improve its situation”.

She said it was important to wait for a report from the team of commission, European Central Bank and International Monetary Fund experts currently scrutinising Greek economic reform plans, “and then we’ll do what is necessary”.

She said it was better to be “thorough than quick”.

In the longer term, the possibility of treaty change should not be ruled out. "We want euro to be a success and we need to make resources available to achieve this success," she said.

Agencies