German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are making progress, even as "imbalances" in euro-area economies show that the task is far from complete.

"We've come a good way along the mountain path, but we're not completely over the mountain," Merkel told reporters in Rome late yesterday after talks with Italian Prime Minister Mario Monti. "I suspect that in the next few years there will continue to be new mountains — there won't be a celebratory event in which we say we're over the mountain and now we can sit among the trees and say that we've done it."

Merkel praised Monti's "bold" efforts since taking office on Nov. 16 to overhaul Italy's economy, which include 20 billion euros in austerity measures and steps to deregulate services amid surging Italian bond yields that threatened to rip apart the currency region. Aided by European Central Bank liquidity measures, Italian 10-year borrowing costs have fallen to 4.89 percent from a euro-era record of 7.26 percent on Nov. 25.