Spain, the euro zone's fourth biggest economy, said earlier this week it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.
The European Central Bank dashed investors' hopes of an easing of monetary policy or another flood of cheap liquidity for banks despite saying that the euro zone money market has again become "dysfunctional". The ECB left interest rates on hold at 1% at its monthly meeting.
The move raised pressure on EU political leaders to outline a solution to the bloc's festering debt crisis at a summit later this month, which is being watched closely in the United States and other global powers anxious about a sluggish world economy.
Spanish Economy Minister Luis de Guindos said after talks at the European Commission on there were no immediate plans to apply for a bailout. Spain would await the results of an IMF report and an independent audit of the banking sector, both due this month, before taking decisions on how to recapitalise the banks, he said.
ECB President Mario Draghi said financial markets were not wrong to be worried about the future of the euro zone but they underestimated the political commitment backing the single currency. He welcomed EU leaders' agreement to step up work on a long-term vision for a full economic and monetary union.
"Some of the problems in the euro area have nothing to do with monetary policy," he told a news conference. "I don't think it is right for monetary policy to fill other institutions' lack of action."
Acknowledging that the rate-setting governing council's decision was not unanimous, he said "a few members, I would say not many" had wanted a rate cut on Wednesday.
Asked whether the central bank would take supportive action if the EU summit agreed to move towards a fiscal and banking union, he said there was no such "horse-trading" but the ECB would monitor developments and stood ready to act.
The European Commission proposed yesterday far-reaching powers for regulators to take control of failing banks, a first step towards a eurozonene banking union. But the measure first has to be turned into law by EU governments and the European Parliament and may not take effect until 2015, too late to help Spain with its current banking crisis.
Sources familiar with discussions in Berlin and Brussels said intensive contingency planning was already under way for EU aid to Spain. Lawyers were examining the fine print of European treaties to see how Madrid could get money from the euro zone's rescue funds without the stigma of a full economic adjustment programme, they said.
German officials said the aim was to avoid the embarrassment of Spain having to adopt new economic reforms imposed from outside and monitored by European and International Monetary Fund inspectors, as occurred with Greece, Portugal and Ireland.
With an IMF report on Spain's banking sector due next Monday, some sources hinted there could be intensive preparatory talks at European level at the weekend.
In public, a German government spokesman repeated that it was up to Spain to decide whether to seek help from the euro zone's EFSF rescue fund. The ECB's Draghi took the same line.
Sources in Berlin said the German Finance Ministry believes the euro zone's permanent rescue fund, the 500-billion-euro ($625 billion) European Stability Mechanism, due to enter into force next month, could lend directly to Spain's FROB bank rescue fund. EU lawyers are not convinced this would be legal.