Mario Draghi Talks Market Regulation And Integrating Banking At Bank Of England Forum

European Central Bank President Mario Draghi said Wednesday Europe needs to embrace a freer and more integrated market system, but he offered little insight into how the ECB would go about achieving those goals. His dovish comments in a speech at a Bank of England forum in London came as no surprise, with analysts predicting this kind of rhetoric for weeks.

"For countries that are part of the single market and that also share a single currency, as in the euro area, it is clear that a fully integrated banking and capital market and a higher degree of institutional integration to protect that market is of great importance," Draghi said.

The ECB president said it is "almost undeniable" that countries that share a single currency and a single market should have stronger common governance and deeper institutional integration, but indicated that this deeper integration has yet to be attained in Europe. He said markets are inherently defined by the people who use them and that "protection of each of its members against potential abuse by others requires appropriate governance."

"National policymakers cannot fully protect their citizens from financial instability without pooling more sovereignty over decision-making," Draghi said.

In remarks last month, Draghi appeared to suggest he would push for an extension of quantitative easing (QE), which sent the euro to a two-month low against the greenback. But in his speech Wednesday, Draghi offered no clear path forward, and the euro, which had fallen to a session low against the dollar, did not gain any ground as a result of his comments.

The ECB has been grappling with mixed domestic economic signals, an uncertain global outlook and differing opinions about what to do to combat inflation. Draghi said last month it was too early to decide whether to expand the ECB's 1.1 trillion euro ($1.07 trillion) bond-buying program. That left investors and economists guessing about whether he would commit to doing more to sustain a recovery and rekindle price growth.

Despite the uncertainty in October and Draghi's lack of clarity in his speech Wednesday, most banks expect the ECB to ease policy further as early as December, possibly in the form of an extension of its QE program.

Before Draghi's speech, European equities rallied Wednesday in their biggest gain in two weeks, with brewers Carlsberg and SABMiller PLC among the top advancers in the region. Stocks continued to climb after Draghi's speech, with the Stoxx Europe 600 Index adding 0.9 percent in London at mid-afternoon.