The Guardian has a well-written short report on where the EU Summit stands, if you’re trying to catch up.
One option, said to have been mooted by the Germans, was to use the temporary bailout fund – the European Financial Stability Facility – to absorb excessive Italian and Spanish borrowing costs. Italy would be guaranteed an interest rate of, say, 4%. If the markets charged Italy more, the bailout fund would soak up the difference.
There is only €240bn left in the EFSF, unlikely to be enough to deal with Italy and Spain. More arcane schemes using the fund as an insurance instrument were being mooted, while other ideas included using the bailout funds to buy up Italian or Spanish bonds, or having the ECB act similarly in the secondary markets – since the bank is not allowed to finance eurozone governments directly.
The article repeatedly asserts that the tone and temperature of the meetings is not good. I don’t know how the euro is holding up.