"It's hard to see that Europe would have the resources to take a country the size of Italy into the bailout program," Finnish Prime Minister Jyrki Katainen said yesterday.

Such dilemmas could push Italy into the arms of the IMF, days after Berlusconi said he turned down a credit line with the Washington-based lender. With G-20 leaders debating whether and how to boost the IMF's $391 billion war chest to assist Europe's crisis-fighting, Managing Director Christine Lagarde today warned of a potential "lost decade" for the world economy.

"The bazooka approach would be an IMF-led solution backed by the U.S., China and others," said Fredrik Erixon, head of the European Centre for International Political Economy in Brussels.

There is mounting pressure on the Frankfurt-based ECB -- now helmed by the Italian Draghi -- to bolster a bond-buying program which it deployed as recently as today to ease Italy's strains. Another proposal is for the central bank to provide an unlimited guarantee of Italy's debt in the hope that would remind investors it's struggling with liquidity not insolvency and to buy it time to pass debt-reducing policies.

'House Is on Fire'

"The house is on fire," said Dante Roscini, a lecturer at Harvard Business School and former chief executive officer of Morgan Stanley in Italy. "The ECB needs to print money and buy Italian bonds, it's the only way to put the fire out."

The time may still not have come for the ECB to power-up, given central bankers would first want Italy to earn support by showing how it will eventually deliver budget discipline, said Ken Wattret, chief euro-zone market economist at BNP Paribas SA.

"The ECB will only intervene in a limited way when there's a clearer path towards a more fundamental overhaul of the economy," he said.

Internal politics and ideology may stay the ECB's hand permanently despite its prior willingness to rewrite its rulebook. Since May 2010 the ECB has limited its bond buying to 183 billion, and Bundesbank President Jens Weidmann yesterday said the central bank cannot bail governments out, citing Germany's experience of hyperinflation after World War I.

ECB Religion