President of the European Central Bank Jean-Claude Trichet has told MEPs in Brussels that the resolution of the euro debt crisis is dependent on Governments rapidly implementing a deal agreed in July.
He told the European Parliament's economic and monetary affairs committee: 'The full and timely implementation of the July 21 agreement between heads of state or government is of essence in this respect.'
In his opening statement, ahead of questioning by MEPs, Mr Trichet maintained that there was no liquidity problem for European banks, adding that EU economic growth would continue at a modest pace.
He also defended the purchase of Italian and Spanish debt on the secondary markets as in keeping with the mandate of the ECB.
Separate ECB figures showed that the bank reduced its buying of eurozone government bonds last week to €6.65bn.
The bank further scaled back its intervention after its initial foray into debt markets helped Italian and Spanish borrowing costs to ease.
The reduction in the purchases from €14.3bn in the previous week followed a similar pattern to the ECB's first intervention in the debt market last year, when it also scaled back its bond buys after making an impact in the first week.
Meanwhile, EU Commissioner for Economic and Monetary Affairs Olli Rehn has said he is seriously concerned that continued financial turbulence could harm economic recovery.
He told MEPs that the short-term growth prospects have deteriorated since the Commission's spring forecast and this was now being reviewed downwards.
Mr Rehn said there were 'rather high expectations' that euro bonds - a collective means of European countries raising money from the markets as opposed to individual states - could help solve the debt crisis.
The Commissioner said this would have 'unavoidable implications' for fiscal sovereignty.
Earlier, the leader of the eurozone finance minister's grouping, Jean Claude Juncker, said he was very happy with the progress that Ireland was making in tackling its debt crisis.
Elsewhere, German Chancellor Angela Merkel has warned that countries that do not do their homework on reducing debts will not be able to count on support from euro zone countries.
Mrs Merkel said that countries that are willing to make a lasting and credible detour away from policies of heavy indebtedness can count of solidarity from other euro zone states.
'But those that don't do their homework will not get our support,' Mrs Merkel said at the rally of her conservative Christian Democrats in the state capital Schwerin ahead of an election on Sunday.
