How can the ECB use its power to boost funding markets where the private sector and governments, won’t or cant? That’s the question, euro-watchers are asking themselves.

Draghi and Asmussen have mulled the idea and the German press reported today that:

The European Central Bank is looking into buying bad loans from southern Europe to relieve the pressure on banks in crisis-stricken countries.

In 2008, with the TALF program the Fed introduced the Term Asset-Backed Securities Loan Facility, or TALF, a $200 billion program with a similar goal.

With 17 governments — and a German government believes it’s entitled to all of the benefits of the euro and none of the costs — everything is more complicated.

In the short term, look for signs of progress and perhaps an outline of what could be done. This will be a positive near-term catalyst for the euro because it’s loans not money printing and it could free up lending in the eurozone.

Later, as the inevitable conflicts and problems arise, it will add volatility.