Last Friday's stress tests on European banks for the rising sense of panic in bond and stock markets on Monday. Yes, the stress tests, by ignoring the question of what happens if Greece defaults, failed to inspire greater confidence in the European banking system. The real problem, however, remains the same: the apparent refusal of eurozone leaders to act as if they believe that the survival of the single currency is at stake.
Where is the European Central Bank, ask bankers and investors. It's a fair question. The sight of Italian 10-year bond yields at 6% would, you might think, have been a cue for the central bank, the first line of defence against loss of investor confidence, to wade into the market and start buying Italian debt. Italy, saddled with high debts and low growth, cannot prosper if it is obliged permanently to pay such prices to borrow. A bond-buying spree by the ECB would have been taken by investors as a declaration that eurozone institutions will act to stop the rot. In the US, that's how the Federal Reserve would have reacted.
Instead, the ECB, hamstrung by its mandate and rows with politicians over how the design of a permanent solution to the crisis, did nothing. And, presumably, it will continue to do nothing, at least until the summit of eurozone leaders on Thursday.
But the summit needs to deliver a commitment to a pan-eurozone bond in which members guarantee each other's debts, or at least a portion of them. And, if not a rescue fund, then something that will do the same job.
Without firm action, investors will conclude that eurozone politicians – specifically the German chancellor Angela Merkel – simply lack the will or electoral authority to fight to save the single currency. It will be Rescue Thursday – or Black Friday.