"Money is Debt" is the key message of recent money reform is video. Or at least 97% of it is. Let me explain. Most of the money supply in the economy is bank deposits. And bank deposits are merely a 'promise to pay' on demand, whatever numbers are in your current account. Bank deposits differ from other promises to pay like bonds in that bank deposits can be used to settle accounts; hence they are money. So bank money is both a liability for the bank and is money.
What does this mean? It means that we can swap the liabilities of the state for the liabilities of a bank. The banks can issue bonds and the government should issue money. Easy. Alternatively, the central bank can buy ECB bonds, and raise reserve requirements. Straightforward.
What are the complicating features. There are two: a) fiscal discipline in peripheral Eurozone states and b) uncompetitiveness in peripheral Eurozone states. Can these problems be solved? Yes: but only by solving other problems too. Fiscal discipline can be enforced only by taxes that are actually collected; such as Europe-wide carbon taxes or fuel or property taxes in the specific states in question. Uncompetitiveness is harder. This can be truly solved only by Eurozone break-up or by equivalent nominal changes. But an uncontrolled breakup hits the credibility of the whole European project.
So in sum, there are two options:
a) Keep the Euro; enforce central Eurozone bonds and/or central taxes such as upstream fuel taxes and use the ECB/Quantitative Easing/Full Reserve Banking to sort out the debt crisis
b) Split the North from the South of Europe; create a Southern Euro (Portugal/Italy/Spain/Greece/Ireland) and a northern Euro (Germany). It may be best for Germany and co to leave to set up their own currency (let's call it the ECU) rather than the other way around.
c) Let Greece default and then let them leave the Euro, and see the others fall too.
All options have their advantages and disadvantages. What must be made absolutely clear is commitment either way. Either Greece has the full commitment of Germany or it does not. If it does not, Germany needs to create an alternative structure. Once we have a group with full commitment defined; full reserve banking, transfer of bank liabilities to national savings banks, or government debt purchases must be used to squash any further debt crisis, and appropriate taxes must be raised to ensure proper tax collection.