If communicated well, Lagarde may never have to deploy this new weapon, known as the Transmission Protection Mechanism (TPM).
Market pressure on Italian, Greek and Spanish debt could ease in response to its presentation before it is used, something Maradona and King would be proud of. In June, only the announcement of a new tool cooled the borrowing costs of several-year highs in some parts of the eurozone.
But there are fears that the new program will not be ready in time for next week’s meeting or that Lagarde will not communicate poorly.
Some of the ECB’s rate-fixers have already expressed opposition to a new monetary weapon.
Joachim Nagel, head of Germany’s Bundesbank, warned that it would be “virtually impossible” to decide whether a difference in countries’ borrowing costs was justified, adding that “one can easily find oneself in a serious situation”.
“It would be fatal for governments to assume that the Eurosystem will finally be willing to ensure favorable financing conditions for the member state,” said Nagel, a member of the ECB’s rate-setting Governing Council.
Jack Allen-Reynolds, an economist at Capital Economics, says Italy’s political unrest “could bring down opponents of the TPM, as it’s exactly the kind of situation they don’t want to drag themselves into.”
“This could hamper the debate at next week’s ECB meeting,” he warns.
Lagarde will also face the task of ending incidents with negative interest rates without incident. The ECB’s key deposit rate is currently at an all-time low of minus 0.5%, but will soon leave the territory below zero.