Suspense is mounting ahead of the 6 September ECB meeting where markets hope to see the modalities of the new non-standard measures unveiled. Press is rife with debate on the possibilities and, on Monday, Italian Industry Minister Passera criticised an excess of “incoherent and disruptive communications which have also disturbed markets.” One message is clear and consistent, however, there will be further risk sharing in the euro area, but NOT without conditionality. Conditionality is a political process and will take time, a conclusion that is entirely consistent with steeper peripheral yield curves.

Euro-area crisis resolution talks are still ongoing at both the ECB and amongst European leaders. Chancellor Merkel is due to meet President Hollande on 23 August, Prime Minister Samaras on 24 August, Prime Minister Monti on 29 August and Prime Minister Rajoy on 6 September – coincidentally the same day that markets hope the ECB will unveil the modalities of the new non-standard measures announced by President Draghi at the 2 August ECB meeting.

In our opinion, there is today no final blueprint ready. The Bundesbank’s Monthly Report (released Monday) offered some new clues, however. Weighing these along with other available evidence, several points stand out.