Remember the LTRO's are 3 year terms and frankly money in those accounts are not unlimited plus Europe doesn't have 3 years to play around anymore. The key to the LTRO's and the indicator to watch is what type of collateral is used, how much is the haircut and are nations able to refinance that debt. Interesting summation to this scenario is what happens if the ECB cuts its interest rates. A mad dash to refinance should occur. So who will make the cut is the question.
More stats. German guarantees to the EFSF= more than 200 billion Euros. The Bundesbank is the largest creditor of the Target 2 payment and settlement system by more than 800 billion euros. This is the wire system bank to bank for payments and settlements across Europe. If nations switch to their legacy currencies, the Germans will revamp the system, charge a higher fee? I don't know. Its in German favor either way.
More stats. 68% of all European sovereign debt falls under each sovereign's local law, 32% under foreign Eurozone law. This means the switch back to legacy currencies won't be easy but can be done much easier due to debt value in local nation dollars.
Each nation must revalue their debt in relation to the dollar value of their legacy currency then attached to other nations debt in the form of an exchange rate.
You will see the same old story if all European nations switch back to their legacy currency. The German Deutschemark will rise as usual, Netherlands Guilder will rise, Italian Lira, Irish Punt, Spain Paseta, greek drachma, Portugal escudo and french franc will all drop, massive drop against the all powerful Deutschmark. The two most important players in Europe has been and will always be the Germans and Dutch with a minor role for the French.
But do they all want a switch to the legacy currency. Debt is debt and must be payed back whether the debt was derived in Euros or the new currency. same economic problems will exist. My own question is what interest rate will be the guiding force if they all switch to their legacy currency.