Can gold save the eurozone?

Gold has historically been used as collateral but it's unclear if it would work today.

NEW YORK (CNNMoney) -- With no end to the eurozone debt crisis in sight, there has also been no end to the stream of possible solutions. The latest involves using gold as collateral.

With eurozone central banks holding some 64% of the world's gold reserves, they'd have the heft to back that up.

And there is some precedent, though that was largely during the pre-euro era. So it is unclear what legal hurdles might need to be overcome to satisfy all 17 euro-area nations.

But assuming those challenges could be addressed, experts see it as a real win-win possibility.

"Historically it's not unusual for a country to use gold as collateral," said Jeffrey Nichols, managing director of American Precious Metals Advisors in New York.

The idea of using gold as collateral was rumored to be part of a broader proposal unveiled by the European Commission Wednesday. Although that plan did not specifically discuss the notion of gold as collateral, experts said it's still a plausible scenario.

Eurobonds: The 'solution' that just won't stick

The EC's plan did detail three different options for eurobonds, an idea that's been floated around before and one that's been met with staunch resistance from stronger eurozone countries, such as Germany.

"I think it was wrong of Germany to dismiss it out of hand," said Robin Bhar, senior metals analyst at Credit Agricole in London. "If we're moving toward the end game, then everything should be ruled in and nothing should be ruled out."

Eurozone central banks hold roughly 10,792 metric tonnes of gold. At today's prices, that would give the stash a price tag of nearly $650 billion.

While that's not enough to solve all of Europe's problems, it could offer a step in the right direction, especially if it piques the interest of, say China -- a country that has been lukewarm at best about how involved it wants (or doesn't want) to be.

Nichols said that "given China's thirst for gold," it could very well become interested in offering some type of financial assistance to eurozone countries in distress.

And if the eurozone countries don't want to go 'all in,' it's conceivable that at least one country could try the collateralization route -- barring the potential legal hurdles.

"It's quite possible that one of the central banks could use gold as collateral for refinancing," he added.

Italy's central bank has the fourth-largest gold reserve holding, at 2,451 metric tonnes. And it's also the country that's attracting the most attention recently, for its burgeoning debt load of €1.9 trillion, a GDP-to-debt ratio of 120% and steep borrowing costs that are keeping its 10-year yield stuck uncomfortably close to 7%.

European debt crisis drives gold rush

What would all this mean for the price of gold? Assuming the plan gets enough support, both Bhar and Nichols see it as a positive.

"It would give a sense that gold held by Euro debtor nations would be less likely to flood the market and give legitimacy to gold having some monetary value," said Nichols.

Just a few months ago, gold prices came within spitting distance of $2,000 an ounce. Currently, prices are hovering around $1,700 an ounce.