FRANKFURT, Sept. 26 (Xinhua) -- Mario Draghi, head of the European Central Bank (ECB), said Thursday that the macro-prudential framework in Europe needs be improved to keep pace with developments in the financial system.

Draghi, who is also chair of the European Systemic Risk Board (ESRB), made the remarks at the fourth annual conference of the ESRB.

Europe has gradually established a macro-prudential framework to safeguard financial stability and mitigate systemic risks, and the implementation of macro-prudential policy has substantially improved over the past eight years, Draghi said.

Macro-prudential authorities now exist in all but one European Union member state, with mandates and legal tools to act, and the ESRB acts at the European level. "Yet the overall framework for macroprudential policy in Europe remains incomplete," Draghi noted.

He suggests better analytical tools be developed to adequately monitor interconnectedness and contagion channels in the system.

He also said the policy framework needs to keep pace with developments in the financial system, which would involve broadening the range of policy instruments "beyond those currently available, which focus almost exclusively on the banking sector."

In addition, a clearer conceptual framework should be established to govern policy discussions and interventions, Draghi said.

Macro-prudential policies such as caps on loan-to-value and debt-to-income ratios have become more popular since the 2008 financial crisis. For example, most EU countries have tools in place to address risks in the property sector.