Taoiseach Enda Kenny has said that the ECB should be used to provide the "unlimited firepower" to prevent financial panic from spreading.
Addressing the Konrad Adenauer foundation, a political think tank associated with German Chancellor Angela Merkel's CDU party, Mr Kenny said that the existing EU bailout mechanism, the EFSF, had failed to attract investor confidence and that as a result the ECB should now be used to provide "unlimited firepower".
In response, the German Finance minister Wolfgang Schauble, who jointly chaired the meeting in Berlin, was swift to reject the use of the ECB as a lender of last resort.
He said that in the US the Federal Reserve could step in as a bridge during a debt crisis but, he insisted, in Europe this would not work.
"I think that would be the wrong solution for Europe, it would only win a little time and you will pay a higher price in the end," he said.
Earlier, Mr Kenny said that he hoped Ireland could return to the bond markets in late 2012, and that steps toward any changes to EU treaties would be very challenging.
He was speaking at a press conference after a meeting with Mrs Merkel, Mr Kenny said that that the Government was absolutely determined to continue with reforms.
Mr Kenny said that Mrs Merkel had told him that treaty change would mean a change in oversight of national budgets, but with some flexibility for individual budget strategy.
Mrs Merkel said that Ireland was an example of how to reform.
The German chancellor praised Ireland for meeting its targets under the bailout programme, adding that she was aware what it meant for the people of Ireland.
Without specifying, Mrs Merkel said Germany would give every possible support it could to Ireland until, as she put it, the country got back on its feet.
She said that Germany believed that treaty changes would be needed to win back market confidence, and that Germany was therefore willing to give up some national sovereignty.
She said treaty change was required to allow member states to be brought before the European Court of Justice for breaching the Stability and Growth Pact.
She said she wanted a strong European Union of 27 nations, and a strong euro zone of 17.
Mrs Merkel said she did not see the possibility in EU rules of the European Central Bank solving the euro zone crisis.
