Governor of the Central Bank Patrick Honohan has said the importance of the announcement by the European Central Bank that it was preparing a new bond buying programme should not be underestimated.

Mr Honohan said the intervention in the bond markets was good news for Ireland and the Eurozone as a whole.

Yesterday, the President of the ECB, Mario Draghi said the move could only apply to countries that had entered formal programmes with the EU bailout funds.

Spanish Prime Minister Mariano Rajoy appeared to inch closer to asking for an EU bailout for his country earlier today, but said he needed to know what conditions would be attached and what form the rescue would take.

Buying bonds and providing aid would all be designed to bring down what have been prohibitive borrowing costs in the indebted countries.

Mr Rajoy said he was ready to do what is best for Spain, going far further than he did yesterday when refused on three occasions to  whether he would seek the aid.

"I will do, as I always do, what I believe to be in the best interest of the Spanish people," Mr Rajoy said.

"We still don't know what these measures are," he said, reference to a comment by ECB President Mario Draghi that the bank was examining non-conventional measures to defend the euro.

In a letter to Herman Van Rompuy, Rajoy urged the president of the European Council to work towards creating a eurozone-wide banking and fiscal union as soon as possible.

He said he believed that the outline for a single supervisory system for the banking sector should be ready before the end of this year.