NICOSIA  - The euro zone sovereign debt crisis has eased in recent weeks, ECB Governing Council member Athanasios Orphanides said on Saturday, adding more needed to be done to convince markets the euro zone had an effective crisis handling mechanism in place.

“We have seen a very substantial improvement if you look at where we were in November and where we are now in terms of risk for example of France, Belgium, Italy and Spain,” Orphanides told a conference in Cyprus. “But you realize we have not solved the problem yet, because the risk is a lot greater than the risk we started off with two years ago.”

He said a defining moment for the euro zone was when Europe’s leaders abandoned the concept of private sector involvement (PSI) as a means of handling debt crises, leaving it in place only in the case of indebted Greece. Orphanides, governor of the Central Bank of Cyprus, has frequently argued that the PSI, which imposed a writedown in the value of Greek sovereign debt held by creditors, triggered contagion throughout the euro zone.