While volatility in euro money markets is still very elevated, we can observe that some relevant risk- spread indicators are trending back to – let us call it – “Pre-Lehman” levels. Expecting “pre-crisis”-levels to make a comeback – the time when risk was significantly underestimated – is neither realistic nor desirable.
However, sustainable relaxation in the inter-bank money markets requires a sustainable return of confidence in the financial markets. In order to achieve this aim, it is necessary that the process of restoring banks’ balance sheets continues, supported by public stabilisation funds.