The scheme is aimed at depressing the costs of borrowing for Spain and Italy and countering the risks of a fragmentation of the eurozone and the unravelling of the single currency.
But Draghi also set strict terms for triggering the bond-buying programme, putting pressure on the eurozone's political leaders to request help, enter austerity programmes, and agree on direct bailouts for struggling governments before the ECB will act.
Draghi brushed aside strong resistance from Germany's powerful Bundesbank, which lodged the only vote against the new policy in the ECB's 23-strong governing council, to come good on his pledge in London six weeks ago that the central bank would do "whatever it takes" to save the euro.
The new bond-buying scheme, to be known as outright monetary transactions or OMTs, means that the ECB will intervene in the secondary markets to buy up the debt of governments whose bond yields are too high and are therefore jeopardising the uniform conduct of monetary policy across the eurozone, Draghi said.
The purchases would apply only to short-term debt of up to three years. The countries benefiting from the help would first need to request a eurozone bailout and governments in the single currency would need to decide to use the bailout funds to lend directly to struggling states.
Draghi said he could not order the participation of the International Monetary Fund (IMF), but would strongly seek it in any future bailout programmes.
It is understood that the ECB believes IMF involvement in the new policy and future bailouts is essential. Initial reaction from the Fund's Washington headquarters was extremely positive. "We strongly welcome the ECB's new framework. The IMF stands ready to cooperate within our frameworks," said Christine Lagarde, the IMF chief. "We see the ECB's action as an important step toward strengthening stability and growth in the euro area."
Draghi's action received a glowing critical reception across Europe. Olli Rehn, the European commissioner for monetary affairs, welcomed the move; leaders of political parties in the European parliament compared Draghi's decisiveness favourably with the perceived fecklessness and hesitation of eurozone political leaders. Britain's Institute of Directors called the policy shift a potential "game-changer".
The tributes were more muted in Germany, however, where monetarist hawks accuse Draghi of overstepping his mandate, embarking on a policy that will fuel inflation, and illegally if surreptitiously launching a policy of financing debt-ridden countries.
Spanish and Italian 10-year borrowing costs fell to three- and five-month lows following Draghi's announcements.
"A necessary condition for outright monetary transactions is strict and effective conditionality attached to an appropriate European financial stability facility/European stability mechanism [bailout]," Draghi said.
"Such programmes can take the form of a full EFSF/ESM macroeconomic adjustment programme or a precautionary programme, provided that they include the possibility of EFSF/ESM primary market purchases," he announced. "There is no ex ante quantitative limit to the interventions."
Draghi said that the interventions could be halted if they were seen to have been successful in curbing the cost of borrowing, and also suspended if the country benefiting from the help breached the terms on which it received it.
The ECB is understood to take the view that the new policy can be up and running very quickly – in days, rather than weeks or months – and hopes that the pledge to intervene in the bond markets will by itself have a stabilising effect, curbing borrowing costs for Spain and Italy and acting as a deterrent, meaning that market interventions may not even be needed.
If this does not happen, however, and the markets step up the pressure on Madrid or Rome, the country concerned would need to make the first move in requesting a rescue before the ECB will act.
More broadly, the Frankfurt-based central bank is also making explicitly political demands of eurozone government leaders, urging them to streamline and integrate the institutional architecture linking the 17 countries, meaning greater pooling of sovereignty and surrender of national powers in fiscal and budgetary policy.
The ECB believes it is entitled to demand this as part of its remit to secure the future of the euro.
The Bundesbank has argued that a bond-buying programme would be tantamount to direct financing of governments, which is proscribed by the ECB's statutes.
But while Germany's central banker, Jens Weidmann, has been a vocal monetarist hawk in the contentious debate leading to Thursday's move, the other German in the ECB governing council, Jörg Asmussen, played a key role in drafting the new policy. The government in Berlin has mounted minimal resistance to the new ECB policy.
The initiative is the third time since the spring of 2010 that the ECB has intervened in this way, first buying up Greek debt in May that year, then mounting an unsuccessful attempt last summer to relieve the pressure on Rome by buying Italian debt.
These two previous attempts are viewed as having done little to contain the euro crisis. This time, Draghi said, "it will actually work."
The reasons he cited were the strict terms attached to receiving assistance; the decision to forgo the ECB's status as a senior creditor and take equal ranking with other creditors; and because the bond-buying would be restricted to short-term debt.
Although he overcame the Bundesbank's resistance, Draghi emphatically argued – in terms clearly aimed at assuaging German objections – that the new policy was fully in line with the ECB's fundamental monetary policy remit.
He repeatedly stressed that the aim was to "repair monetary policy transmission channels". He laid out analysis stressing that inflation risks in the eurozone were low over the next two years, and emphasised the tough terms that would need to be observed to qualify for the aid. All ECB bond-buying will be "sterilised" – that is, offset by removing equivalent liquidity from other parts of the euro system – to counter inflationary risks.
Spain is the strongest candidate for becoming the first beneficiary of the new programme. But following talks in Madrid on Thursday with Chancellor Angela Merkel, the Spanish prime minister, Mariano Rajoy avoided all talk of whether Spain would request a bailout.
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