ECB's Nowotny says euro zone on path to recovery: report

The euro zone may soon witness the "green shoots" of economic revival, Ewald Nowotny, a member of the European Central Bank's governing council, said in a newspaper interview published today.

The euro zone may soon witness the "green shoots" of economic revival, Ewald Nowotny, a member of the European Central Bank's governing council, said in a newspaper interview published on Wednesday.

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Nowotny told the Times there was a prevailing optimism in the region, helped by progress in the government debts of Italy and improvements in monthly economic indicators.

"From the demand side we see improvements in most parts of Europe," Nowotny was quoted as saying.

"There is a more optimistic perspective now. There is some talk about green shoots," he said.

Nowotny, who is also the governor of the Austrian central bank, was speaking while on a visit to London ahead of the ECB's second Longer Term Refinancing Operation (LTRO) on Wednesday.

The ECB has injected almost half a trillion euros in cheap three-year loans into the euro zone banking system and is expected to lend a similar amount at its second such tender, known as an LTRO, on Wednesday.

He said the first round of LTRO had been a success and expects similar results following Wednesday's instalment, but warned previous gains would "not mean there should automatically be a third round".

Nowotny also warned the long-term structural effects of emergency cash injections into the banking sector had to be taken into account.

He said the region has "some specific problems of what's called addicted banks, and these have to be solved".