But the Irish bailout showed that solvency can be a question of judgment rather than precise rules, while the concept of eligible collateral is similarly elastic.

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Big banks and asset managers will have to do a better job of keeping track of margin requirements and the available stock of eligible collateral they have.

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But what is keeping regulators around the eurozone on red alert is the danger that the banks under their scrutiny will run out of eligible collateral, and will no longer be able to borrow from the central bank.

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In practice, the ECB is already playing a central role in dealing with failing banks because the ECB Governing Council must make decisions about whether to provide liquidity to these banks against eligible collateral or, as has become fairly common, in the form of Emergency Liquidity Assistance.

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That expands the list of eligible collateral which banks can post from securitized debt (those asset-backed bonds accepted since Dec. 2007 on top of government gilts), just so long as the loans are residential or commercial real-estate mortgages, consumer loans (but not including credit cards), or corporate loans to non-bank borrowers.

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The moment that Greece defaults, its bonds will no longer be eligible for use as ECB collateral, the Greek banking system will collapse, and this process will screech to a halt.

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In order to borrow from the ECB, banks need to post collateral, but supplies of eligible assets are limited.

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