Europe's bank promises to rescue ailing economies, but with strings

Indeed, details of “conditionality” were not laid out by the central banker, probably in anticipation of an expected ruling by the German constitutional court in Karlsruhe next week. The court is expected to weigh the legality of bailouts, and a negative ruling would throw Europe and markets into uncharted territory.

EU leaders offered today an unusual show of diverse support as Germany’s Angela Merkel met with Spain’s Mariano Rajoy in Madrid, while Italy’s Mario Monti hosted EU commission chief Jose Manuel Barroso in Florence, and France’s François Hollande confabbed with Britain's David Cameron in London.

Draghi said the 32-member ECB council agreed to the plan with only one dissension, and addressed rumors that the outcome was skewed by sympathy in the council towards southern Europeans. “It’s not a southern cabal or an Italian thing,” said Draghi, himself an Italian.

Whether Draghi and the ECB have either oversold themselves, or have been oversold as saviors in the press, remains a question, Mr. Tilford says.

“There is a risk of people seeing this ECB action as a game changer. It may appear the ECB is doing all that is necessary, but that's getting ahead of the game,” he says. “This is not shock and awe, it is not the ECB flooding the market with capital like the Fed or the Central Bank of London, and dispelling all the convertibility risk."

"Convertibility risk" refers to the chance that the euro will eventually break apart back into drachmas, liras and so on, trapping bond holders in a weaker currency.

Today’s ECB announcement is the latest in a series of actions by the EU to staunch a crisis that dates to a bailout of Greece in the spring of 2010. EU leaders have met 19 times since Greece announced its books had been cooked for years and it was on the verge of insolvency.

Nicknamed “Super Mario” in some quarters, Draghi has been widely seen outside of Germany as one of few heroes of the euro crisis. He took over the reins of the central bank last year and immediately uncorked some 1.5 trillion in loans to European banks.

This July he did nothing to belie his reputation, saying the ECB would go to any length, “do whatever it takes,” to save the euro.

The ECB’s efforts are seen in many quarters as adding necessary glue to a monetary union that has been criticized as incomplete, since the EU does not have a fiscal union that would allow for transfers of funds, as featured in nations like the US, Japan, and the UK, which have federal treasuries or central banks that print money, and have fiscal unity that means, for example, that individual states or provinces can be easily aided by the federal center.

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