This has taken place against a steepening of the yield curve. In the third quarter of 2009 the difference between the yield on longer-term euro area government bonds and the threemonth inter-bank interest rate was on average 308 basis points. This is the largest gap since 1980.
It suggests that the funding costs for banks have become favourable relative to the yield on longer-term investment such as government bonds. Overall, the recent purchases of government bonds by euro area banks have not been out of line with what we would expect, given the current circumstances.