European Central Bank President Mario Draghi acknowledged on Wednesday that Greece could leave the euro area and signaled policymakers will not compromise on their key principles to prevent an exit.

While the bank’s “strong preference” is that Greece stays in the euro area, “the ECB will continue to comply with the mandate of keeping price stability over the medium term in line with treaty provisions and preserving the integrity of our balance sheet,” Draghi said in a speech in Frankfurt.

Since the euro’s founding treaty does not envisage a member state leaving the monetary union, “this is not a matter for the Governing Council to decide,” Draghi said.

The comments are the closest Draghi has come to conceding that Greece could choose to leave the euro region, having previously said only that such an event was not envisaged and would not help Greece.

“The Governing Council’s strong preference is that Greece will continue to stay in the euro area,” Draghi said.

He said euro-area countries have made more progress on cutting budget deficits and introducing structural reforms than has been acknowledged.

“Everywhere governments have undertaken significant and difficult reforms and continue to do so,” Draghi said, adding that public debt overall in the euro area should stop rising next year and decline thereafter.

[Bloomberg]