Crucial to how the current euro zone debt crisis plays out is the role of the European Central Bank.
Under President Jean-Claude Trichet, the ECB has bought large amounts of debt – that is government bonds – from Greece and other countries with shaky economies – including Portugal, Ireland, Spain and Italy.
Greek bonds alone account for 190 billion euros of what the ECB has lent according to calculations by the think thank Open Europe.
That is twice the amount the Bank has in its reserves and even a partial default would leave it insolvent.
So will the leaders’ summit resolve things and let the ECB off the hook?
Dirk Müller, chief analyst for Cashkurs, does not think that that is likely: “The only thing that we can really hope for is to win time to push the problems further back. You can’t expect much more than that; you cannot expect the big solution, we cannot expect the markets to be excited.”
That will not please the International Monetary Fund which is also involved with bailing out Greece and others as a lender of last resort.
The IMF has said immediate action is required, and if that does not happen the problem will spread through the euro zone and the effect will be global.