Portuguese bond spreads over benchmark German Bunds soared to a euro-era high last week as a perceived lack of progress on reforms to tackle the euro zone debt crisis unnerved investors.
"There is an 'overshooting' effect now, an upwards exaggeration, just as there was an understatement before," Draghi told the German daily Frankfurter Allgemeine Zeitung.
Draghi is seen as a leading candidate to succeed ECB President Jean-Claude Trichet, particularly after Bundesbank chief Axel Weber withdrew from the race last week.
The Bank of Italy chief is highly regarded but may have trouble winning support in Germany, where Chancellor Angela Merkel needs to be able to sell the next ECB chief to the German people as someone they can trust to delivery price stability.
Draghi held up Germany as an example to other euro zone countries in keeping its economy competitive.
"We all have to follow Germany's example," he said. "Germany has improved its competitiveness by instituting structural reforms. That should be an example."
Draghi added: "Italy is not a country at risk."
He also dismissed the idea of jointly issued Euro bonds.
"If Europe were not only a currency union, but also a union with joint taxes and a joint budget policy, Euro bonds could make sense. But we are not a tax or budget union."
Source: http://www.reuters.com
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