MercoPress. South Atlantic News Agency

Central Bank urges EU members to press ahead with financial reforms

“The solvency of sovereign states has ceased to be a foregone conclusion” said the next ECB president Mario Draghi

The current and incoming head of the European Central Bank demanded that European governments quickly implement a strengthening of a regional bailout fund and press ahead with wider reforms.

With some Euro zone states dragging their heels in approving the reform of the European Financial Stability Facility agreed in July, ECB President Jean-Claude Trichet and Bank of Italy Governor Mario Draghi warned any delay risked worsening the Euro zone's debt crisis.

Draghi, who takes over from Trichet in November, also emphasised that the ECB sovereign bond buying program, which has bought breathing space in debt markets for peripheral states such as Italy and Spain in recent weeks, was a temporary measure and no substitute for fiscal reforms.

On Sunday the head of a junior government party in Slovakia said parliament would not vote until December at the earliest on the strengthening of the 440 billion EFSF Euro zone joint rescue fund agreed by EU leaders in July, much later than the early October deadline Euro zone officials target.

“It is clear ... that we have an absolute and total need for all of the decisions to be implemented immediately as was decided ... by the different heads of state and government,” Trichet said at the conference in Paris.

Draghi, in the text of his speech posted on the Bank of Italy Web site, warned that: “Delays or uncertainty in the process risk reigniting market turbulence.”

“The solvency of sovereign states has ceased to be a foregone conclusion” Draghi said, calling for Euro zone members to press ahead with austerity measures and warning that ECB bond purchases were a temporary phenomenon.

“The Program is temporary and fully sterilized; most importantly...it cannot be used to circumvent the fundamental principle of budgetary discipline,” Draghi said.

Italian Prime Minister Silvio Berlusconi's backtracking on key measures in a proposed austerity package, which was seen as a vital condition for the ECB bond buying, has alarmed his European partners in recent days.