In a recent speech, European Central Bank executive board member, Lorenzo Bini Smaghi, reminded his audience that central bankers have adopted Sir Thomas More as their patron saint. The 16th-century English politician and philosopher is an appropriate choice. More was Lord Chancellor when he refused to accept Henry VIII's decision to make himself head of the English church. For this, he was imprisoned and executed. ECB officials can be forgiven for reflecting on the saint's fate as they contemplate their current predicament. They have a mandate to ensure monetary and financial stability in the eurozone. In the first objective they have been remarkably successful. But thanks partly to design flaws in the creation of the single currency and gaping holes in its governance, the bloc's finances are far from stable.

The question is how far the ECB should go to prop up the eurozone, which now appears perilously close to collapse.

For much of the past three months, the bank has been at loggerheads with some eurozone governments—and Germany's in particular—which accuse it of preventing a resolution of the Greek debt crisis by refusing to change its collateral rules so it could continue to accept the country's government bonds if it were rated in default. Germany favours private-sector involvement in any deal, something ratings firms have made clear would automatically trigger a default rating.

At the same time, the ECB has faced calls from some quarters to resume its Securities and Markets Programme, a controversial measure introduced last year at the time of the first Greek debt crisis that allowed it to intervene directly in markets to buy government bonds without collateral. Indeed, last week the markets rallied briefly amid rumours that the ECB had been active in the markets to calm the panic surrounding Italian government bonds. This week it emerged that it hadn't, in fact, made any purchases.

That is as it should be. The ECB has already shown considerable flexibility in its efforts to prop up the eurozone. It has significantly widened the range of collateral eligible for its liquidity arrangements and provided unlimited funds to the banking system at longer maturities than under its normal operations. Without these measures, large parts of the eurozone banking system—and the economies they support—would have collapsed. Greek, Irish and Portuguese banks are all currently heavily reliant on ECB support.

But these are all typical central bank operations that can be justified under its financial stability remit. The challenge for central banks is to ensure they don't cross the grey line that divides liquidity operations - short-term lending against appropriate collateral - from funding operations, longer-term lending that exposes them to credit risk.

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