"The only thing that would be a real game changer would be if the ECB were to take up this idea of being a lender of last resort to governments, but printing money is against the ECB's religion," said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam.
If the central bankers do eventually turn to the printing press it may be part of a broader strategic effort to finally conquer the turmoil which includes Greece being ejected from the euro area, said Eoin Fahy, chief economist at Kleinwort Benson Investors in Dublin. Merkel and French President Nicolas Sarkozy said last week for the first time that a country could leave the euro area if it fails to live by its rules.
"Eventually they'll get to that point where they have to press 'print,'" Fahy said. "The question is, do they throw Greece to the wolves first?"
Italy may still not need saving. IHG Global Insight economist Raj Badiani says Italy can survive "several quarters of expensive debt auctions" thanks to positive cash flow and relatively low levels of private debt.
Andrew Bosomworth, a senior portfolio manager at Pacific Investment Management Co. in Munich, senses a "watershed moment." With Italy all but locked out of markets, European officials may have to jettison their short-term firefighting and pick between a smaller, stronger euro zone or a federalist structure with greater cross-border support.
"What is happening is what they've been trying to stop," said Bosomworth, a former ECB economist.