Similarly, the bank lending rates for households and corporates have also started to rise, though at a slower pace. Since last August, the nominal sovereign bond yields have increased significantly. The increase, which gained pace in the last week, ranges from over 2 ppt for Germany to over 4 ppt for Greece.
The spreads over German bonds have also increased notably, but remain far below the highest levels during the euro area debt crisis. A certain increase in spreads is justified, after their policy-induced compression over the last few years. However, if financial fragmentation were to become excessive, then this would endanger the proper transmission of monetary policy throughout the euro area.