European Central Bank president Mario Draghi has said the euro is not in danger despite concerns over a break-up and that greater financial, budgetary and political union among euro zone countries is inevitable.

Asked in an interview with French newspaper Le Monde if the euro was in danger, Mr Draghi said: "No, absolutely not. We see analysts imagining the scenario of a euro zone blow-up."

"They don't recognise the political capital that our leaders have invested in this union and Europeans' support. The euro is irreversible," he added.

In the long term, the euro would need to rest on a foundation of greater integration among euro zone countries, Mr Draghi said.

"All movement towards financial, budgetary and political union is for me inevitable and will lead to the creation of new supranational bodies," he said.

European leaders took a step towards greater integration last month at a Brussels summit where they agreed to put the ECB in charge of supervising banks and gave the ESM rescue fund the power to recapitalize troubled banks.

Mr Draghi said the ECB's monetary policy and bank supervisory activities would have to be kept separate in order to avoid conflicts of interest and suggested that an "independent structure" could be built.

The scandal over the fixing of the LIBOR rate was undermining confidence in a cornerstone of the global financial system, he said.

Turning to the economic outlook in the euro zone, Mr Draghi said he did not see the risk that the bloc as a whole would enter a recession and that the situation would gradually improve towards the end of the year and the beginning of 2013.

The ECB cut its interest rates to a record low earlier this month to breathe life into the ailing euro zone economy amid signs that inflation pressures were subsiding.

Mr Draghi said that the ECB, which strives to keep euro zone inflation at a rate close to but less than 2 per cent, was prepared to take action in the case that the risk of deflation emerged.