European Central Bank head Mario Draghi said today that the bank "stands ready to act" with measures to boost the struggling European economy.

But in a speech in France, he urged national governments to take their own growth-enhancing steps by reforming their economies.

Draghi told French lawmakers today that governments "need to do all they can" to increase potential growth and make their economies more competitive.

One thing, he said, they could do is to streamline excessive labour market regulations that have contributed to high levels of youth unemployment.

He repeated earlier comments that the bank "stands ready to act again when needed" to support the euro zone economy, which shrank 0.2% in the first quarter - its sixth quarterly decline in a row.

So far the ECB has cut its key interest rate to a record low of 0.5%, offered unlimited cheap loans to banks and outlined a plan to buy government bonds issued by indebted countries. 

Analysts say the bank could cut rates again sometime this year.

The bank has also said it has examined imposing a negative interest rate for money banks deposit with it - the hope behind such a policy, if enacted, would be to get them to lend the money rather than hoard it.

Another measure could be an effort along with the European Investment Bank to encourage more lending to small companies, which are having trouble getting credit from banks. However that could take months to put in place.

Draghi told the French legislators that the bank's low rates would remain in place "for as long as needed" and that any withdrawal of its emergency measures was far off. "As I said before, exit is distant," he said.

But the ECB boss warned that the central bank alone could not solve Europe's problems of slow growth and too much government debt. ''It is important to acknowledge that there are limits to what monetary policy can achieve," he said.

"The ECB has done as much as it can to stabilise markets and support the economy. Now governments and parliaments need to do all they can to raise growth potential, strengthen competitiveness and build a stronger, more stable European monetary union,'' he added.

The ECB President said it was "indispensable" for the European Union to strengthen banking regulation by adding an EU-wide agency that could wind down and restructure failed banks. That would be coupled with the ECB's new role as the EU's banking supervisor, expected to begin next year.

Banking troubles have been a key driver of Europe's troubles, since bailouts can burden government finances and a functioning banking system is essential so companies can borrow to expand operations.

The ECB's rate-setting council next meets on July 4 to discuss interest rates and possible other measures.