Even if the peripheral countries would want to stimulate their economies, they can’t. They can’t devalue, they cannot inject a monetary stimulus and the money supply is barely growing or contracting without them being able to do much, if anything, about that. Many of their banks are woefully under-capitalized and therefore they are not lending, exerting further deflationary pressure on the economy.

via Europe’s Catch-22 Situation Finally Losing Its Edge? – Seeking Alpha.