BRUSSELS, May 17 (Reuters) - Shaken by a debt crisis that is hurting their currency, euro zone finance ministers met on Monday to discuss more effective fiscal discipline for now and the longer term.

The talks were the first since euro zone governments hatched a $1 trillion plan a week ago in a bid to stabilise nervous financial markets and limit contagion risks after the financial rescue of Greece, the first in 11 years of monetary union.

German Finance Minister Wolfgang Schaeuble said it was time to look beyond crisis containment to concrete decisions on debt-control rules for the future.

It must be made clear that policymakers set the rules, not the markets, he said on arrival for the talks in Brussels.

The 16-country euro zone needed to reduce public deficits, discuss how to improve economic growth and find ways of strengthening the fiscal rules of the European Stability and Growth Pact, he said.

The euro's exchange rate versus the dollar has fallen about 7 percent in the past month and some 14 percent this year. It hit a four-year low around $1.2234 hours before the meeting.

Jean-Claude Juncker, Luxembourg prime minister and chairman of the talks, said he was less worried about the euro's level than the pace at which the exchange rate was changing.

The euro's fall, analysts say, is fuelled not just by concern over bloated debts but also the risk that debt-shrinking austerity measures will stunt post-recession economic recovery.

Governments had to knock public finances back into shape and find solutions that do not destroy growth, Austrian Finance Minister Josef Proell said.

German Chancellor Angela Merkel said on Sunday that the $1 trillion package -- basically standby loans and loan guarantees for any country that faces excessive debt market pressure -- had merely bought the euro zone time to address a deeper problem: a yawning gap between its strongest and weakest economies.

Before the global financial crisis and recession of 2007-09, several small euro zone countries such as Greece, Portugal and Ireland, plus mid-size economy Spain, enjoyed economic growth fuelled by credit and, in the case of the latter two, housing and construction booms that have now gone bust.

They are now under pressure to find other sources of growth, and some including French Economy Minister Christine Lagarde have said the flipside is that Germany should do more for Europe by boosting its domestic consumption.

Gross domestic product in the euro zone contracted more than 4 percent last year, far more than a dip in U.S. GDP of around 2.4 percent. The European Commission forecasts that GDP will rise just 0.9 percent in 2010 and 1.5 percent in 2011, compared to U.S. GDP gains of 2.8 percent and 2.5 percent.

Spain and Portugal have announced further austerity measures in recent days and what started in financial markets as a demand for greater fiscal consolidation is starting to morph into fears about the hit to growth that will result. (Additional reporting by Sudip Kar-Gupta, Gavin Jones and Jan Strupczewski; Writing by Brian Love; Editing by Dale Hudson)

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