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LISBON (Reuters) - Europe's growing inequality is highly destabilising and needs to be tackled with education, innovation and investment in human capital, particularly jobs for young people, European Central Bank President Mario Draghi said on Monday.
Income inequality has grown among euro zone countries since the global financial crisis and some measures also show divergence between the bloc's richer and poorer members, a source of tension for the 19-member currency bloc.
"Is this a seriously destabilising factor that we should cope with?" Draghi said in a rare town-hall style meeting with university students in Lisbon. "Yes it is."
"We have to fight against inequality," Draghi in response to a student question.
Draghi, leading one of Europe's most respected institutions, has for years called on governments to enact fundamental reforms, arguing that the ECB is able to prop up growth, but only temporarily, giving governments a window of opportunity.
Eurostat data has shown that only a handful of countries have managed to shrink income inequality since the crisis while it has grown sharply in places like France or Spain. Figures also show the highest level of income inequality in the bloc's periphery, like Greece, Spain and Portugal, hit hardest by the crisis.
Calling convergence among euro zone members "fundamental," Draghi said the best way to fight inequality is by creating jobs, which comes from an increased investment in education, skills development and innovation.
He also called on governments to consider better income and wealth redistribution policies.
Defending the ECB's ultra easy monetary policy, Draghi said that super low rates create jobs, foster growth and benefit borrowers, ultimately easing inequality.
He also rejected calls to exit super easy monetary policy quickly, arguing that premature tightening would lead to a fresh recession and more inequality.
Reporting by Balazs Koranyi Editing by Jeremy Gaunt.