European Tribune - The "Euro Crisis" - Both more and less than meets the eye

Another possibility (and the one I would favour) is to raise the inflation target

If only because it's the only one which is immediately available and compatible with the treaties.

The 2% inflation target has been defined by the ECB itself as its definition of price stability (which is not named but not defined in the treaties).

ECB: Definition of price stability

While the Treaty clearly establishes the primary objective of the ECB, it does not give a precise definition of what is meant by price stability.

The ECB's Governing Council has announced a quantitative definition of price stability:

• "Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%."

The Governing Council has also clarified that, in the pursuit of price stability, it aims to maintain inflation rates below, but close to, 2% over the medium term.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010