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ECB's Mersch says European economy not out of danger zone

[October 23, 2014] FRANKFURT (Reuters) - The European economy is not out of the danger zone, European Central Bank Executive Board member Yves Mersch said, calling for further financial integration to overcome remaining impediments to growth.

"The overall situation of the European economy makes it abundantly clear that we cannot wait for a miracle to end a period of low growth. We are not out of the danger zone," Mersch said in a dinner speech on Wednesday.

"The patient is still fragile and unfortunately relapses cannot be ruled out," he said.

Further integration in form of a capital markets union could provide "very important impulses for both economic recovery and financial stability", he said, but also called for financial, fiscal and economic policy to do their share to keep the recovery on track.

"Non-respect of agreed rules by some is clearly establishing moral hazard risks for the actions of others," Mersch said.

(Reporting by Eva Taylor)

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