Given Mr Dallara's position, experience, access to information, and credentials it might be worth our time to revisit the received wisdom that 'a central bank can print to it's heart's content' and does not need to worry about the quantity and quality of it's assets.

The real world is not simple, constraints (consequences) exist, and central banks are not perpetual motion machines. Serious inflation and hyperinflation has visited central banks in Israel, Zimbabwe, and Germany (among others) which thought excessive printing was the answer. Devaluation and flight to quality accompanies excessive printing by central banks. Open market operations are the mechanism by which central banks use assets such as special drawing rights, government bonds, foreign currency, and gold to increase or decrease the amount of base money in the system. The quality and quantity of central bank assets in Europe are a concern in many quarters, keeping in mind that while the European Central Bank is in charge of Euro policy, nations participating within the 17 member Eurozone each have their own central bank. The ECB has mechanisms to encourage, regulate, and protect itself from the Eurozone financal system.

As unemployment spreads across Southern Europe we see the amount of private savings deposits decrease and the number of non-performing private and corporate loans increase, which leads to bank failures at a certain point. Banks are then nationalized, broken up, and sold to save the system since many are TBTF and associated losses are socialized via higher taxes. Tax revenue, however, is also adversely affected by unemployment. State cost and revenue structures become dangerously unbalanced and nations, like Greece, default on their obligations and harm their societies. Since South and North are interconnected via economics (even if the EU and Eurozone dissolve), contagion spreads.

IMO this financial crisis writ large is a turning point for Europe. Very broad brush, the continuum as i see it, ranges from Peace to War via the political continuum of Federalism to Fragmentary Nationalism. The failure of the Holy Roman Empire and the resultant history may be worth consideration...although it is noteworthy that military expenditures within Europe are very low while educational standards are very high this time around.

We will probably see a bit more movement after the upcoming Greek elections and after the next meeting (at least 18 so far according to some reports) of senior Eurozone members on this crisis...if the bank runs don't overtake the political process.

Bottom line, craven politicians eventually have to make hard choices because central banks are not magical institutions that can fix all societal ills by endless printing.