Ferchi

To put it another way: yes, the Bundesbank would essentially be printing a trillion euros' worth of Deutschmarks, which isn't a very Bundesbanky thing to do, and is in theory inflationary. But if you're creating a new currency, then you need to print that currency. And so long as German banks kept those Deutschmarks on deposit at the Bundesbank, and remained shy about lending them out to borrowers in other countries, the money supply in Germany wouldn't actually increase at all.