o any achieved equilibrium would inevitably remain tentative and dependent on ongoing evidence of fundamental retrenchment progress. PIIGS bond spreads would remain high (but nonetheless within the limits of perceived debt sustainability), forcing ongoing deflation/retrenchment. The best we should expect is that the crisis has passed its point of peak neurosis and that spreads will subside gradually over the coming years as retrenchment targets are adhered to.

o There are nonetheless significant grounds for optimism that stabilisation can be achieved through such an ECB focused holistic remedy providing some combination of adequate overall monetary easing and sufficiently increased support for PIIGS bond markets. Both are absolutely necessary but the more the ECB does of the former, the less it might have to do of the less palatable latter. Potential for sub-optimisation nonetheless lies in any underestimation by the ECB of the imperative for a sea change in its monetary policy settings.

o There is scope for Euro weakness if the ECB eases aggressively. This has always been a sovereign debt crisis within Eurozone rather than a currency crisis for the Euro. So the Euro could go weaker, providing further welcome support for the overall Eurozone economy, if the remedy for the debt crisis includes aggressive monetary easing. With monetary policy now returning to pro growth settings in the BRIC economies, Eurozone exporters to these regions would stand to benefit.