A senior Treasury Department official said on Tuesday that European governments should adopt economic reforms to make their countries more attractive to investors.

"The weak investment climate has deprived Euroland of the many benefits of its other policy reforms," Edwin M. Truman, the Treasury Department's assistant secretary for international affairs, told the World Affairs Council.

Reform of tax, labor, and financial laws are crucial, Mr. Truman said. Countries that already have modernized these laws-such as the United States, England, and Denmark-have achieved strong growth without undue reliance on exports, he said.

"What the world needs from Europe, and what monetary union by itself does not automatically provide, are policies that will stimulate employment and domestic investment," he said. "Our hope is that active, pro-growth policies in Euroland as a more unified whole will contribute to more rapid European growth and a stronger world economy."

Mr. Truman said Europeans are enjoying only some of the benefits of monetary union.

"Certainly the effort to qualify for EMU membership catalyzed the macroeconomic policymaking process in many countries in a beneficial manner," he said. "A number of countries made long-overdue adjustments that contributed to reduced government deficits, inflation rates, and interest rates."

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