The President of the European Central Bank, Mario Draghi, has urged euro zone governments to act faster to expand their bail-out fund, expressing exasperation at the lack of progress to date.
It is believed the borrowing costs of Spain and Italy reduced today only because the ECB had intervened significantly in the market. The yield on 10-year Spanish bonds fell to 6.427% this evening from levels of over 6.9% earlier this morning. Italy's borrowing costs are also below the 7% level today - standing at 6.666%.
Meanwhile, the leaders of Germany and Britain sent out different signals today about how to solve the euro zone's debt crisis and admitted they had failed to narrow differences over the introduction of a financial transaction tax in Europe.
At a news conference in Berlin, British Prime Minister David Cameron said the euro zone needed a credible firewall and should use all of its institutions to fight the crisis, but his host German Chancellor Angela Merkel said she favoured a "step by step" approach.
"The British demand that we use a large amount of firepower to win back credibility for the euro zone is right. But we have to take care that we don't pretend to have powers we don't have. Because the markets will figure out very quickly that this won't work," she said.
Asked about agreement on a financial transaction tax, Merkel said the two had not made any progress overcoming divergent views on the introduction of such a tax in Europe.
Draghi takes a swipe at EU leaders
As the borrowing costs of Italy and Spain headed to unsustainable levels over the past number of days, there have been renewed calls, including from Taoiseach Enda Kenny, for the ECB to do more.
This morning ECB President Mario Draghi responded, chiding euro zone governments for not acting fast enough to get their rescue fund up and running.
Speaking at a banking conference in Franfurt, Mr Draghi took a swipe at EU leaders saying: "Where is the implementation of these long-standing decisions? We should not be waiting any longer."
Mr Draghi also stood firm against heavy pressure to come to the rescue of the euro zone, standing by the bank's independence and anti-inflation duty. He said that governments they had a duty to get their finances in order and enact agreed measures to stabilise the crisis-wracked euro zone.
Pressuring the ECB to act would undermine the bank's credibility, Draghi warned. In the current environment, the "continuity, consistency and credibility" of the ECB and its monetary policy were "essential", the Italian central banker said.
There is growing pressure from political and market circles for the ECB to ramp up hugely its purchases of debt issued by governments in trouble to relieve upward pressure on borrowing rates and the threat that devalued government bonds could cause severe strains in the banking sector.
It was in the hands of the politicians to solve the debt crisis, Draghi insisted. "National economic policies are equally responsible for restoring and maintaining financial stability," he said.
"Solid public finances and structural reforms - which lay the basis for competitiveness, sustainable growth and job creation - are two of the essential elements." And a third essential element for financial stability was "a much more robust economic governance of the union going forward," he said, calling for "urgent implementation" of the recent decisions taken by the European Council and the EU summit.
Draghi complained that it was now 18 months since EU leaders agreed to set up the European Financial Stability Facility or EFSF as a bailout fund for debt-stricken countries. It was also four months since EU leaders had finally decided to make the full EFSF guarantee volume available. "And we are four weeks after the summit that agreed on leveraging of the resources by a factor of up to four or five and that declared the EFSF would be fully operational," Draghi said.
