European Central Bank chief Mario Draghi says Europe is in a "very grave" economic situation, but adds that eurozone governments are progressing well with efforts to put their finances in order.

European Central Bank president Mario Draghi at the European Parliament in Strasbourg, eastern France, Monday, Jan. 16, 2012.

Draghi's comments came Monday, as he attended a public hearing with the European Parliament Committee on Economic and Monetary Affairs. He said that markets had, to a large extent, anticipated Standard and Poor's downgrade of a slew of eurozone countries and priced assets accordingly.

He urged eurozone countries not to "shy away" from the serious economic situation. Instead, he called on governments to continue implementing their budget consolidation plans to combat the debt crisis.

As for the role of European Central Bank, he said the bank will do all it can to fight the crisis within the limits of the Treaty governing it.

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