BRUSSELS (AP) — The head of the European Central Bank says the region's persistent recession is weakening its banking system and is the most pressing risk it currently faces.
The economy in the 17-nation euro area has shrunk for six straight quarters and unemployment has risen to record levels. ECB president Mario Draghi testified to the European Parliament Monday in his role as chairman of the continent's risk watchdog, the European Systemic Risk Board.
Asked what he sees as the main systemic risk, he identified the recession. He said: "The prolonged recession is weakening the banking system, it is increasing the risk premia, it is reducing the creditworthiness of counterparties."
Draghi insisted that debt-troubled countries need to continue getting their finances in order — "fiscal consolidation was and still is unavoidable."