ECB chief hails EU fiscal pact

Brussels - The president of the European Central Bank, Mario Draghi, on Tuesday welcomed a European accord on tighter budgetary rules, hailing it as a movement in the path towards a fiscal union.

The pact is a "first step toward a fiscal union," Draghi told reporters after EU leaders agreed on a set of rules to strengthen budgetary discipline which he said "certainly will strengthen confidence in the euro area."

He also hailed the finalising of the permanent €500bn bailout fund, the European Stability Mechanism (ESM), which aims to prevent the debt crisis spreading throughout the 17-nation eurozone on entry into the market come July.

Some EU leaders hope that tougher rules will encourage the fiscally conservative ECB to take more decisive action to ease the crisis.

The pact forces the 25 member states that have signed up to it to enshrine in their national law a so-called "golden rule" to balance budgets or face automatic sanctions.

Only Britain and the Czech Republic have refused to put their names to the fiscal pact.