Jean-Claude Trichet has warned MEPs that forcing investors to take losses by restructuring national debt they now hold would reward speculators.
Mr Trichet was speaking before the European Parliament's Committee on Economic and Monetary Affairs in his capacity as chairman of the European Systemic Risk Board.
The board was set up to tackle risks to the financial system.
He said such losses were not part of rescue programmes agreed to in bailouts for Greece and Ireland and should not be applied after the fact.
Mr Trichet, also head of the European Central Bank, was responding to a question over so-called haircuts, essentially losses taken by investors if a country defaults on its debt, meaning that the bonds it has issued are repaid at less than full value.
Some politicians have called for such haircuts to ensure that banks share in losses that have been borne so far mainly by taxpayers.
The rescue packages agreed for heavily-indebted Greece and Ireland have already been approved by the EU, the International Monetary Fund and others, Mr Trichet said.
'The message is very simple - apply the programme ... as has been done all over the world in many, many cases,' he said.
Not doing so would reward speculators who 'short sell' a country's bonds - or sell them with the intention of buying them back later at a cheaper prices and pocketing the difference, the ESRB chairman said.