"As long as the ECB stays on the sidelines, a speculative, fear-driven withdrawal of market funding can feed a self-fulfilling insolvency.
Any number of banks and insurance companies would take huge hits.
The ECB will have to come in, or accept the biggest banking crisis since 1931," Mr Buiter said.
He said the "fundamental design flaw" in economic and monetary union is the lack of a lender of last resort.
The ECB throws Italy and Spain to the wolves - Telegraph