By Luke Baker and James Mackenzie
Mario Draghi signaled the ECB would go on buying troubled states' bonds as leaders of the 17-nation single currency area struggled to agree a convincing set of measures.
"The Eurosystem (of central banks) is determined, with its non-conventional measures, to prevent malfunctioning in the money and financial markets creating an obstacle to monetary transmission," he said in typically coded ECB language in a speech text released in Rome.
Draghi, who will succeed Jean-Claude Trichet on November 1, made clear that measures could only be a temporary expedient and said it was up to governments to tackle the roots of the debt crisis that began in Greece two years ago.
However, his statement appeared to rebuff pressure from Germany's powerful Bundesbank for the ECB to end the bond-buying program which prompted the resignation of the two most senior German ECB policymakers this year.
The second euro zone summit in four days, due to start at 1730 GMT, seems unlikely to produce a detailed masterplan despite Franco-German assurances that a "comprehensive solution" to two years of debt turmoil would be found.
Bank of Canada chief Mark Carney said he had received guidance that "that there will need to be subsequent meetings to provide more detail."
Dutch Prime Minister Mark Rutte urged decisive action now.
"We need a real solution, we won't buy anything with mediocre compromises," he told reporters upon his arrival in Brussels. "We are in this job to take decisions. It's not easy, but it really has to happen."
Greek debt needed to be made sustainable, the bloc's rescue fund must be made strong enough to convince markets and Europe's banks had to be shepherded through "this difficult phase," Rutte said.
The leaders may agree on broad outlines but leave crucial details, including the numbers on a Greek debt write-down and on funds available for financial fire-fighting, for later negotiation among finance ministers.
A European Commission spokesman said there would not be detailed numbers on all aspects of the political agreement.
While there is consensus on the need for European banks to raise around 110 billion euros ($150 billion) in extra capital to withstand a potential Greek debt default and wider financial contagion, two other critical parts of the plan remain unclear.
Governments and banks are still haggling over the scale of write-offs private bondholders will have to take on their Greek debt holdings, sources familiar with the negotiations said.
"There will be give and take with the banks until the last minute," a Greek government source involved in the Brussels negotiations said. "As far as now, the talks are going on."
Uncertainties also remain around complex plans to scale up the region's 440 billion euro ($600 billion) bailout fund, known as the European Financial Stability Facility, without allowing it to draw on the ECB.
Investors stayed cautious, with the euro surrendering earlier gains and inching higher against the dollar and European shares flat on the day.
50 PERCENT "HAIRCUT?"
One proposal set to be adopted involves creating a special purpose investment vehicle (SPIV) to tap foreign sovereign and private investors, such as Chinese and Middle Eastern wealth funds, to buy bonds of troubled euro zone countries.
The EFSF said its chief, Klaus Regling, would visit China to meet with investors on Friday.
But Chinese and European officials said there was no word yet on whether Beijing, which holds AAA-rated EFSF bonds and an estimated 600 billion euros in euro-denominated debt, would also put money into the SPIV.
The other proposed method for scaling up the EFSF involves using it to offer partial guarantees to purchasers of new euro zone debt. The two options may be used in combination.
German Chancellor Angela Merkel won a parliamentary vote of support for strengthening the rescue fund after warning in a dramatic speech that Europe was facing its most difficult situation since the end of World War Two.
"If the euro fails, then Europe fails," she declared, saying there was no certainty that the continent would then enjoy another 60 years of peace.
Merkel earlier told parliament that private bondholders would have to take a substantial write-down so that Greece's debt could be reduced to 120 percent of gross domestic product by 2020 from 160 percent this year.
Experts say that implies a 50 percent "haircut" for private investors, which Greek Finance Minister Evangelos Venizelos was reported to have told Greek banks was the most likely outcome.
Jean-Claude Juncker, the chairman of euro zone finance ministers, forecast an eventual deal on a 50 percent write-off but officials said it might not be sealed on Wednesday and the banks wanted a menu of options for the bond swap rather than a single solution.
European leaders' pattern of responding too little, too late has spawned a wider economic and political crisis that threatens to undermine the euro single currency and the European Union project.
EU sources said detailed figures may not materialize until November 7-8, when EU and euro zone finance ministers hold their next regular meeting.
LETTER OF INTENT
Also weighing on the summit was deep concern about Italy, which is now in the bond market firing line.
Rome's inability to deliver a substantive plan for reforming its pensions system has raised doubts about Prime Minister Silvio Berlusconi's seriousness in tackling a crisis that threatens the euro zone's third largest economy.
Berlusconi was bringing to Brussels a "letter of intent" to his European partners on long awaited reforms, aides said, after his government nearly collapsed on Tuesday over their demands that Rome fulfill a pledge to raise the retirement age.
The letter was expected to contain only vague promises of economic reform rather than the firm undertakings sought by exasperated EU leaders in return for support for Italy's bonds.
Italy has the euro zone's largest sovereign bond market, with a public debt of 1.8 trillion euros, 120 percent of GDP. If it went the same way as Greece, Ireland and Portugal, the rescue fund does not have enough money to bail Rome out.
Draghi's statement appeared to supersede a dispute between Germany and France over how the ECB, the ultimate defender of the euro, should be involved in trying to resolve the crisis.
Paris had wanted the summit to endorse a continuation of the ECB's "non-standard measures" as long as Europe faces exceptional circumstances.
Merkel said Germany opposed a line in the draft summit conclusions urging the ECB to continue these measures. A euro zone source said the phrase would be dropped.
(Additional reporting by Annika Breidthardt and Sarah Marsh in Berlin, Daniel Flynn and Harry Papachristou in Athens, Barry Moody in Rome; Writing by Luke Baker and Mike Peacock; editing by Janet McBride)