A fully integrated interbank money market was, and is, a sine qua non for the implementation of the single monetary policy, since it ensures an even distribution of central bank liquidity and a homogeneous level of short-term interest rates across the euro area. Integration in bond markets has also progressed significantly.
Government bond yields have converged considerably and they are now mainly driven by euro area-wide shocks and news, and only a small fraction of yields can be explained by national risk factors.