There are a few ways to extinguish debt.  Pay debt in the currency in which it was nominated; Repudiate; Get a debt reduction. Handover assets valued to an amount in the currency of the debt.  Get a disclaimer.  Meaning some entity takes the place of the debtor and at some point no longer honors payment. Recuperation then goes south. The debt needs discounting to 0, and it's gone. You only need a holding company somewhere in a sunny jurisdiction.  BTW banks do this from the creditorside: they either sell at a discount to debt hawks, or move the assets into a bad debt bank. This way they can still meet stresstest requirements and act as if nothing is wrong.  From this view, the latter, remplacement, is interesting since it does not require a reset in the normal economy. Only in the financial superstructure. It spells the end though of any bank.  It could be though that certain countries have to take a huge hit. But then again, they do the same thing and are scot-free.