Mario Draghi, president of European Central Bank, delivered a dire warning Monday on the potential for Europe's debt crisis to upend financial markets.

Draghi's comments came as part of testimony to the European Parliament.

Draghi, from Wall Street Journal:

European Central Bank (Creative Commons)

"We are in a very grave state of affairs and we must not shy away from this fact."

The ECB president urged European governments to put in place recommendations from the European Systemic Risk Board, on which Draghi serves as chair.

Draghi said central banks' willingness to lend has thus far helped to somewhat calm markets, but that central banks may pose problems in the long run.

Draghi, from RTTNews:

"Their existence might also imply a moral hazard risk, hindering EU banks from adopting a more robust funding structure."

Despite Draghi's comments, European markets were higher Monday.