From Credit Suisse, Euro endgame looks like this:
(1) Some form of soft QE for the ECB (as if the euro were to break apart the ECB would have to probably print money to recapitalise itself given that the ECB repos E300bn of peripheral European debt and owns close to another E75bn). If the ECB is going to have to print if the Euro breaks apart, surely it will be inclined to do so to protect the Euro.
(2) Some form of Brady plan. Could the ESFS be expanded to buy secondary market debt at close to market prices and then issue a new AAA rated bond for the debt of the country concerned? Could the IMF/US be involved in this?
(3) More deflation in peripheral Europe (to restore competitiveness).
(4) Ultimately a weaker Euro as market senses point 1
(5) More fiscal integration of Europe.
Makes sense. It’s either that or someone defaults, and it all goes to pot. One or the other.