ECB promises euro action – but only after governments

Mr Draghi indicated that any ECB intervention would start at the earliest in September and would depend on countries in trouble on bond markets making a request and accepting strict conditions and supervision.

He also indicated that German central bank chief Jens Weidmann had expressed reservations about bond-buying and further efforts would be needed to persuade the Bundesbank before a final vote to take action.

At a news conference in Frankfurt following the central bank’s monthly meeting, Mr Draghi said the bank would consider other “non-standard” measures to rein in the euro zone crisis.

“The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective,” Mr Draghi said after the bank kept euro zone interest rates at a record low 0.75 percent.

The bank has already spent 210bn euros buying bonds under its now dormant Securities Markets Programme (SMP) since May 2010, with limited impact, but Mr Draghi said the new effort would be different in scope and conditionality.

Any new ECB action was conditional on euro zone governments using their EFSF and ESM bail out funds first, he said.

“Governments must stand ready to activate the ESM/EFSF in the bond market when exceptional financial market circumstances and risks to financial stability exist,” he said.

Financial markets seemed underwhelmed by the announcements, with some investors having interpreted Mr Draghi’s comments last week as a sign of imminent rather than future and conditional action.

Ioan Smith, strategist at Knight Capital, commented: “It is quite disappointing ... There is a lack of any action so he has basically passed the buck back on to politicians”.

German bund futures extended gains, a sign of investors seeking safety, and the euro fell.

Mr Draghi was under intense pressure from investors, European leaders and even the United States to deliver yesterday on his pledge to do whatever it takes to save the euro by bringing high borrowing costs down and easing the debt crisis.

His comments in London last week that the ECB would do whatever it takes within its mandate to protect the currency bloc from collapse – “and believe me, it will be enough” – had already eased tensions on the debt markets.