The banks require wholesale recapitalisation, which is now happening belatedly, and they probably require to be taken over because right now their risk policies are as tight as they were wild before the crisis (ie they are overreacting).
The economy requires a spending boost, in the form of more money to those hardest hit or in the form of useful investment programmes in energy infrastructure, ie of the coordinated and large scale kind. In the long run, we're all dead. John Maynard Keynes
If the ECB is largely powerless with today's crisis, while the economy requires a spending boost... of the coordinated and large scale kind, is this best to be done by individual governments? Isn't there an argument here for some degree of institutional eurozone economic governance?
However, for all the reasons we all know about, it's not an easy political project. And I wouldn't want to make plans to combat the incoming potential-depression contingent on solving the political problem of European governance.
Thus, for now I think we have to work through agreements between the individual governments...
But there are limits to what the central bank could do, as any teacher in a monetary policy class will tell you. A temporary repeal of 3% rule is in order - it might be easy to push it though right now, and some governments are clearly itching for the fiscal stimulus that seems to be needed right now.
