Skittish markets will be watching the European Central Bank closely tomorrow as governors hold their monthly meeting against a backdrop of a falling euro and cautious interbank lending.
There is little doubt the central bank's record low interest rate of 1% will remain unchanged. But ECB president Jean-Claude Trichet will field thorny questions about how the bank plans to steer out of its biggest crisis ever and restore confidence in the single currency and its promise to foster greater European integration.
In particular, investors want details on the bank's surprise decision to buy debt issued by countries like Greece and Portugal and on how long the controversial Securities Market Programme might last.
But Mr Trichet can point to some good news, including strong economic results from Germany, progress by euro zone finance ministers on a huge finance backstop for weaker states and the approval of a 17th member, Estonia, next year.
But the euro's plunge in value by more than 20% from late last year to about $1.19 and chronic financial market pressure on peripheral euro zone countries have overshadowed plans to unwind unorthodox monetary measures.
Beyond the release of updated euro zone growth and inflation forecasts by ECB staff, the bank might decide to keep providing unlimited amounts of money to commercial banks in a bid to prevent interbank markets from freezing up.
Meanwhile, euro zone banks have parked a record amount of cash in the European Central Bank's overnight deposit facility, a result of persistent tension on interbank lending markets. The total amount of €364.59 billion beat the previous record of €361.69 billion set on Monday.
The amounts demonstrate that commercial banks would rather place excess funds with the ECB and earn interest of 0.25% rather than lend them to other banks at higher rates.
Banks normally exchange surplus cash with each other on interbank money markets to help fund regular operations, but have become wary of each other's ability to repay loans owing to exposure to losses on loans to euro zone countries.
A similar situation prevailed after the US investment bank Lehman Brothers collapsed in September 2008, but the amount deposited with the ECB has now surpassed levels seen then.
