'whatever it takes' to save the euro

If he doesn't deliver a suitably grand follow-up at that time investors - who have already 'bought the rumour' - will 'sell the fact', as Kathleen Brooks of Forex.com warns.

The obvious staging point for action to stem the rise in Spanish and Italian borrowing costs, which is leading to talk of full-scale bailouts, is when the ECB's governing council meets in Frankfurt to decide on policy on Thursday. Of three major central bank gatherings then and there week - the Bank of England and US Fed as well meet - the ECB is thought most likely to throw more support at markets, with the other two holding fire.

The re-activation of the SMP

The re-activation of the SMP, a scheme to buy troubled peripheral nations' sovereign bonds, seems to be the favourite. Economists reckon this could make a big splash in thin summer markets, bringing down peripheral bond yields. It's a temporary solution, buying time until a German court gives its verdict on the eurozone's 'ESM' bailout fund, the longer-term scheme which replaces the short-term ESFS bailout pot.

The SMP is a secondary market tool, buying up bonds that are already out there. Alternative measures would involve buying bonds straight from the governments issuing them at auction.

The EFSF/ESM funds could theoretically do this only they are running terribly short on cash. A QE scheme in the same fashion would have limited financial firepower. This is where the idea of granting the eurozone's bailout fund a banking licence comes in. That way it could borrow from the ECB and never run short of funds. Austria's central bank governor, Ewald Nowotny, gave markets a brief boost before this week when he hinted again at this plan, now Draghi has spoken against it. Aside from this, this wouldn't happen earlier the German court decision in September. 

Or the ECB could encourage commercial banks to buy up bonds from governments. The LTRO scheme of cheap loans to banks - the biggest 'cash for trash' scheme in the world - is one way to do this, if it were to be given a third life. This is another politically fragile mechanism that comes with the added disadvantage that it maintains the poisonous tie between banks and governments.