ECB's Nowotny: ECB will phase out, drain liquidity

VIENNA Nov 25 (Reuters) - The European Central Bank (ECB) will phase out liquidity measures and drain cash it has injected into the banking system to avoid any risk they could lead to higher inflation, Governing Council member Ewald Nowotny was quoted as saying on Wednesday.

Nowotny told Austrian parliamentarians that improved conditions on financial markets meant that not all liquidity measures were needed to the same extent as they were in the past, according to a summary of his remarks to the parliamentary finance committee.

"Monetary policy will make sure that the extraordinary measures will be phased out and the liquidity that was provided will be drained to avoid any risk for price stability in the medium and long term," the summary, provided by the Austrian parliament, described him as saying.

Nowotny also told the committee that rising unemployment could slow down the nascent recovery in the euro zone and that it was too early to say that the recovery was already self-sustained.

Nowotny reports twice a year to a closed-door meeting of the committee. The parliament's summary did not contain direct quotes. (Reporting by Boris Groendahl; Editing by Ron Askew) ((boris.groendahl@reuters.com; +43 1 53112-258; Reuters Messaging: boris.groendahl.reuters.com@reuters.net))