U.S. Federal Reserve Chairman Alan Greenspan says "creeping protectionism" could harm the flexibility of the global economy that helps nations cope with economic problems.

Consequently, he said, creeping protectionism must be "thwarted and reversed."

The top U.S. central banker's comments in Germany Tuesday come as world trading partners have been bickering over agricultural export subsidies and recently tangled over steel tariffs.

Mr. Greenspan also said concerns over the huge U.S. trade deficit could probably be resolved without "stress", so long as the global system remains flexible.

Concerns over the U.S. current account deficit are one reason that the U.S. dollar has fallen in value against the euro and other major currencies.

Earlier, German Chancellor Gerhard Schroeder discussed the strengthening euro with Mr. Greenspan.

Economists say the stronger euro raises the cost of European-made goods on world markets.