The eurozone, through the ECB, is considering providing insurance for buyers of government bonds for the first time.
The leap forward is being seen as a potentially cheaper way of supporting Spanish debt, with a limit of 50 billion euros for a year.
And it need not be overly painful says the ECB boss.
“We have in place now a mechanism whcih is a fully effective backstop. Conditions don’t need to be necessarily punitive. Actually, many of the conditions have to do with structural reforms, which have both social costs, but also great social benefits, and if they’re well-designed, the second are going to be greater than the first,” said Mario Draghi.
The euro extended gains after Draghi made the announcement, coupled with leaving ECB interest rates on hold at their historic low level.
But he also made it clear he was tiring of playing SuperMario, and it was time individual governments made good on promises to take the necessary action.