The problem is this: there are entities that made bad loans in the past that expect to be paid back in full. They assumed the future would be far better than it turned out to be. There is no way that the loans will be paid back in full. The solution is paying back at a discount, whether through compromise or insolvency.
When everyone wants to pretend they didn’t destroy their wealth, guess what you need?
Inflation. Or, more accurately, expected inflation. At the very least this will raise asset prices and perhaps get things moving again.
I think that Merkel hates this answer but write-downs aren’t happening. That’s a slippery slope that might end in insolvency!