For the time being, the crisis in the euro area has slipped from the focus of public awareness. Nevertheless, it is too early to claim victory over the crisis in the euro area. Even though financial markets might suggest otherwise, the crisis is far from over.
In particular, the sovereign bond yield spreads of the euro-area countries most affected have decreased significantly over the past two years. The fall in long-term interest rates has reduced those countries’ borrowing costs considerably. Markets are rewarding adjustment progress in the stressed countries.