In seven euro-area countries these are now negative on horizons up to three years. In the second half of April, just before the recent increase, German rates were negative on maturities up to nine years.
Thus, I cannot see a single good reason why banks should not have to back government bonds in their balance sheets by capital, but I see many reasons why they should. In this area too, we should work to restore the coherence of regulation in the medium term – not least to address the sovereign-bank nexus.