OMTs are an insurance device against redenomination risk, in the sense of reducing the probability attached to worst-case scenarios. As for any insurance mechanism, OMTs face a trade-off between insurance and incentives, but their specific design was effective in aligning ex-ante incentives with ex-post efficiency. I will come back later to the reasons why OMTs are incentive-compatible.
So, what is the evidence that OMTs have been effective? One year after the announcement, the positive effects of OMTs are visible in several key indicators. First, distortions on the sovereign debt markets have receded.