The move higher in bond yields since November mainly reflects a lift in investors' expectations of future inflation, although there has also been some bring forward in the expected timing of future policy rate increases. The lift in inflation expectations is evident in the graph below (Graph 6).
The link between the financial system and the sovereign was absent from the Maastricht context. As with fiscal policy, financial sector supervision, including both micro-prudential and the then still nascent macro-prudential supervision, the resolution of financial institutions and lender-of-lastresort functions were kept in the hands of national authorities.