The past two years of the eurozone crisis have been a catalogue of incremental steps. Since Greece first went bust back in May 2010, more and more mutual guarantees have been extracted from European leaders. Things they swore they would never do, they ended up doing.

First they set up a "temporary" bailout fund. Then they agreed to establish a permanent rescue mechanism. Then they approved a second bailout package for Greece, having previously said that one was enough. And now European leaders say they are prepared to approve a pan-European scheme of banking deposit insurance.

But the story of the past two years is really one of failure. And that is because all these moves, all these summits, have failed to calm the financial markets. Investors have steadily pushed up the borrowing costs of Spain and Italy. Now those two nations are on the verge of bankruptcy. If they go under, so does the whole project of European monetary union.

Although Germany and other northern European nations have given way in recent years they always successfully vetoed proposals to make the bailout funds big enough to rescue a state the size of Italy. German politicians insisted putting up a large firewall would give Italy a licence to be profligate at the expense of more prudent nations. Now they may have to deal with the dire economic consequences of their decision.

There remains, however, one potential saviour: the European Central Bank. With its unlimited money-printing resources, were it to be permitted to buy European sovereign bonds – or lend to the bailout funds – meltdown may yet be averted.