Speaking at a conference in Frankfurt, the European Central Bank (ECB) president Mario Draghi said on Monday that Europe could still see ‘sizeable gains’ in productivity and that there are several ways to boost productivity in the ways seen in the past.

Draghi said that productivity growth depended not only on the creation of new ideas, but also their diffusion. Draghi noted that there was potential in the euro area to create an environment to spur innovation by bringing spending on research to the higher levels seen in other advanced economies and dismantling barriers to innovative activity.

"Higher productivity growth is also vital to safeguard Europe’s economic model of high wages and social protection, and hence to counter the sense of economic insecurity that is currently prevalent in several advanced economies," Draghi said.

The ECB at its policy meeting last week acknowledged signs of an improving eurozone economy, but said it would keep cheap money gushing for fear of undermining the recovery. Investors are now betting that the ECB will start raising rates before the end of its quantitative easing.

Bloomberg survey showed forward swaps based on the Euro Overnight Index Average are pricing 10 basis points of rate increase by April next year, compared with less than three at the end of last month.