Euro zone growth is stabilizing at low levels, ECB policymaker Jose Manuel Gonzalez-Paramo said on Thursday, adding that the situation in the 17-country currency bloc nonetheless remains fragile.
His remarks echoed comments published earlier on Thursday from ECB President Mario Draghi, who said the worst of the euro zone crisis is over but that risks remain.
Growth in the euro zone is stabilizing at low levels, which is a good sign, but the situation is still fragile, Gonzalez-Paramo told reporters, saying it was up to governments to make sure the bloc's firewall was sufficient to avoid contagion.
Several ECB policymakers have said in recent days the bank needs to begin preparing to exit crisis mode after pumping over 1 trillion euros into the financial system in recent months with twin funding operations to combat the threat of a credit crunch.
Gonzalez-Paramo took a similar line, saying euro zone governments must lead the policy response.
The leaders need to decide on the size of the firewall. We think it must be of sufficient size to avoid contagion.
The evidence so far shows that the twin 3-year funding operations, or LTROs, have had little impact on improving bank lending, though an ECB survey showed banks expect this situation to improve, Gonzalez-Paramo said.
Greece, which secured a second bailout earlier this month, is a unique case; you can't compare it with Portugal, he added.
Following a brief respite for financial markets after Greece dodged default earlier this month, Spain has increasingly taken the crisis spotlight.
A relaxation of budget targets has rattled investors, and yields on Spanish 10-year bonds have risen more than 20 basis points this week towards 5.50 percent.
Gonzalez-Paramo dismissed the prospect of Spain defaulting on its debts.
Talking about the possibility of Spain defaulting, is very, very serious and it shouldn't be talked about in this way, he said. Spain is carrying out a labor reform, a financial reform, and is about to present a budget that will aim to cut the deficit from 8.5 percent to 5.3 percent.
(Reporting by Nigel Davies, writing by Paul Carrel; Editing by Dan Grebler)