Multiple news sources are reporting about a secret meeting due to take place on Monday amongst European officials to discuss the deepening sovereign debt crisis that has now spread to Italy. Below is my translation of an article in German Daily Die Welt:

According to the ECB, the euro rescue package is not sufficient to protect Italy. There are even discussions about doubling it to €1.5 trillion.

The European Central Bank (ECB) is calling for a fundamental reform of crisis politics in the euro countries. The euro rescue funds have to be increased significantly, possibly even doubled to 1.5 trillion euros. Otherwise the current crisis in the EU bond markets threatens to spiral out of control. This is what Die Welt Online has learned via high-ranking figures in central bank circles.

“The poor crisis management of European governments has ensured that the costs of rescue constantly increase,” said one European central banker, who declined to be named. “The existing rescue fund in Europe is not enough to build a credible protective wall around Italy. It was never designed for that.”

The situation is even being compared with the situation from autumn 2008, when the German government issued a trillion-euro guarantee for savings deposits in Germany. An ECB spokeswoman declined to comment on the situation. On Thursday and Friday of last week , bond prices in Italy plummeted, such that raising new debt could be much more expensive.

In June, the head of the Dutch Central Bank, Nout Wellink, already called for a doubling of the bailout package. Since that time, a broad consensus in the ECB Governing Council has developed. To make the decision, however, is not the role of the ECB, but the governments.

The issue for the monetary bosses is not only an increase, but also a more flexible rescue design. “The European central banks are no longer willing to buy bonds of other states,” it is said in central bank circles. “Finance ministers should enable the rescue fund to do so.” Moreover, one must be able to intervene quickly, without waiting for time-consuming operational negotiations.Moreover, better crisis communications is required: Euro Group President Jean-Claude Juncker “talks often, but no one is listening to him any more, but nobody listens to him more,” said a central banker.

It is especially important to take the participation of private sector involvement in crisis plans off the table immediately; the damage has already been enormous, without any benefit. The German Government has been most strongly criticized for this in ECB circles.

Source: Rettungsschirm muss für Italien aufgestockt werden

Also see the negative commentary: Euro-Rettung endet auf jeden Fall im Horrorszenario

This post originally appeared at Credit Writedowns and is reproduced here with permission.