The head of the European Central Bank pledged on Monday to do everything needed to preserve the embattled single currency, vowing the "euro is here to stay" and downplaying current market turmoil.

Speaking at the European Parliament in Brussels, Mario Draghi stressed: “The euro is here to stay and the euro area will take the necessary steps to ensure that.”

“Why then do we still have tensions in a number of market segments? Let me first stress that a lot has been done at country as well as euro area level in terms of economic reforms and governance. But we need full implementation,” he explained.

Mr. Draghi reiterated the ECB’s view was that there would be a “weakening of growth and heightened uncertainty” in the second quarter of 2012.

Nevertheless, he said that further ahead, he expected the euro area to “recover gradually, albeit with dampened momentum.”

Striking a broadly optimistic tone, the central bank chief singled out the most crisis-hit governments, notably Ireland and Portugal, for progress in their reforms.

“Increasingly, national policymakers make the case for reform strongly,” he said.

But Mr. Draghi told deputies that for the eurozone to work, individual countries within the bloc would have to cede more responsibility to the supranational level.

“Sharing of sovereignty is essential ... there is no way out,” he said.

Quizzed about ways to pool debt to ease spiralling borrowing costs, Mr. Draghi welcomed the idea of a common debt redemption fund as ‘intelligent’ but stressed it must come at the end of a long process of European integration.

“We are gradually aiming towards fiscal union but a fiscal union cannot start from being a transfer union. This will be the arrival point,” he said.

After the rate cut to 0.75 per cent, Mr. Draghi refused to commit to further monetary policy action. “We have to look at what the situation is, the data and the developments, and then we will make up our minds ... what to do,” he said. — AFP