The European Union should set up a permanent mechanism to resolve sovereign debt problems sooner than the planned 2013, European Central Bank Governing Council member Ewald Nowotny said on Thursday.

Eurozone reforms, including making the stability and growth pact more effective, must be implemented quickly to create a clear framework, Nowotny said in a statement sent out by the Austrian Central bank.

It cannot be ruled out that individual eurozone countries will face challenges, Nowotny further said.

Earlier this month European Union leaders agreed to set up a permanent mechanism from mid-2013 to resolve sovereign debt problems.

The reform of eurozone rules needs to be brought to a positive conclusion as quickly as possible, including making the growth and stability pact more effective, and the European Stability Mechanism should come in to force before 2013 if possible, Nowotny said.

Eurozone inflation is expected to come to 1.8 percent in 2011 and 1.5 percent in 2012, Nowotny added.

Ensuring price stability will remain a core priority for the ECB and the central banks of the euro system in 2011, Nowotny said.

(Reporting by Edward Taylor; Editing by Hugh Lawson)

European central bank