ECB stands by euro, governments must reform

(PARIS) - The European Central Bank stands ready if needed to defend the euro which will be stronger if the EU makes progress on integration, ECB head Mario Draghi said on Friday.

He also said that the eurozone economy, now in recession, should return to growth in the second half of 2013.

"The recovery will doubtless get going in the second half of 2013," he said ahead of an announcement by the ECB on Thursday of its latest forecasts for the eurozone.

Regarding the eurozone debt crisis, Draghi told Europe 1 radio: "We will do what is needed, and we are ready to intervene again if it is necessary... even to an unlimited extent".

The ECB, which is independent in managing monetary policy for the eurozone, has said in various statements in recent months that it is prepared to buy unlimited amounts of debt issued by eurozone countries in difficulty over their debt.

But this explicit support is on condition that the countries concerned first request financial help from European Union rescue funds and in return accept conditions regarding economic reforms.

Draghi warned that while the ECB was ready to act, governments also had to take measures.

"We will succeed on condition that governments act," he said.

It was essential that the European Union speed up work on increased integration and this progress should be made first with regard to the 17 countries in the eurozone.

"We have to learn to share sovereignty," Draghi said.

He said that the current trend for governments to reduce their public deficits was "inevitable" but that structural reforms to create jobs and growth was also needed to mitigate the effects of deficit reduction.

"The key word is competitiveness, we have to eliminate rigidities," notably regarding the labour market, he said in an implicit reference to a recent change of emphasis by the French Socialist government towards a so-called competitiveness pact.

Draghi said that in the EU "we have to mobilise our extraordinary human resources" and particularly young people.

Asked about a decision by Moody's credit rating agency to downgrade France's top-level rating by one notch on November 19, Draghi said that it had had little effect but that it was a "signal to be taken seriously."