If the spread continued to narrow and were the cost of debt to fall below the nominal GDP growth rate, as has already happened in the other euro area countries, it would be easier to lower the debt-to-GDP ratio. Narrowing the spread would also attenuate the risks for credit access conditions.
The tensions over public debt securities have pushed down private bond prices and the corresponding issue prices, especially for banks. There has been little effect so far on interest rates on loans, in part thanks to high levels of liquidity and the improvement in banks’ balance sheets.