Frank Westermann, Sven Steinkamp, 22 August 2012

Despite assurances that the ECB will do “whatever it takes” to save the euro, interest rates on sovereign bonds in the highly indebted European countries remain alarmingly high. This column argues that in order for interest rates to fall, policymakers need to assure private investors that their bond holdings are safe from subordination.

Cristina Checherita, Maria Attinasi, Christiane Nickel, 11 January 2010

The crisis has raised long-term government bond yield spreads across Europe. This column discusses the causes. Increased risk aversion and concern about public finances explain most of the movements in sovereign bond spreads. Moreover, bank bailouts transferred credit risk from the private sector to governments.

Jürgen von Hagen, Ludger Schuknecht, Guido Wolswijk, 21 December 2009

Spreads on government bonds in the EU15 have risen dramatically since the Lehman default in September 2008. This column shows that financial markets’ reactions were not random but rather reflect an intensification of risk concerns, especially regarding the state of public finances. German bonds have acquired a ‘safe-haven' status that they did not have before.

Events

CEPR Policy Research