The European Central Bank can do a lot more than it is doing to help resolve the crisis. In the past few weeks, the ECB has expanded its programme of sovereign bond purchases and helped to plug a dollar funding gap for eurozone banks. It will also need to cut interest rates.

Soon, the ECB will come under pressure to monetise debt. The ruling of Germany’s constitutional court and a shocking rise in anti-euro sentiment in the German government make it unlikely that the European Union will end the crisis by means of a eurobond and a fiscal union in the short run. That leaves the ECB as the last line of defence for the euro. Can this work?

On a purely technical level, it does not really matter whether you create a eurobond, or whether the ECB buys all the debt. The ECB’s liabilities are a hidden eurobond. Contrary to what various Germans in the ECB’s governing council may have been saying, we are not in this situation yet. The ECB’s securities markets programme runs to about €150bn, not really a macroeconomically relevant number. One can argue that it helped stabilise the financial system, and thus the transmission mechanism of monetary policy. But once you raise this level to, say, €1,000bn, you will have crossed the line. By then, you are undertaking a fiscal operation.