German Chancellor Angela Merkel has underlined her country's resistance to the idea of giving the European Stability Mechanism a banking licence.
The proposal would allow the ESM to borrow from the European Central Bank and enable it buy up more of a country's bonds.
Ms Merkel was speaking following a meeting with Italian Prime Minister Mario Monti in Berlin.
The talks were dominated by the condition of the eurozone and the economic development of Europe overall.
Ms Merkel praised Italy’s reform efforts, saying that she sees them as "the significant contribution" to bringing down the country's high borrowing costs.
She added: "Mario Monti informed me today that the wide-ranging Italian government consolidation and reform agenda is impressive."
Mr Monti said that Italy is making good progress and markets are beginning to honour that.
The meeting came a week after the French and Greek leaders visited Ms Merkel as part of an intense round of shuttle diplomacy.
Mr Monti met European Commission President José Manuel Barroso last night in Brussels to discuss a more cohesive European Union.
The Italian Prime Minister will also meet French President Francois Hollande next week.