The crisis plaguing the euro zone has reached a "systemic dimension", outgoing European Central Bank President Jean Claude Trichet said on Monday, warning that the risk of economic shocks spreading further across the financial sector has increased.
"Signs of stress are evident in many European bond markets," Trichet told a European parliamentary committee in Brussels on Tuesday.
"Over the past three weeks the situation has continued to be very demanding," he said.
He added the situation had been aggravated by the drying up of bank funding markets and urged national governments and EU authorities to work together.
"Further delays are only contributing to aggravate the situation," he said.
"The crisis is systemic and must be tackled decisively," Trichet told the European Parliament's Committee on Economic and Monetary Affairs.
"The high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. It threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond."
Trichet called for governments and European authorities to act together to solve the crisis, adding that delay would be disastrous.
"It is a matter of urgency that all authorities act in unison, with total commitment to safeguarding financial stability," he said.