In Italy, a prudent fiscal policy has helped reduce the yield spread between Italian and German ten-year bonds; it is currently below 190 basis points, which is still well above the value that would be warranted by Italy's macroeconomic fundamentals and around double that of Spain and Portugal.
Market-making activity is becoming thinner, and private financing is slowing across the world. The volatility of global liquidity in recent years underscores the value of the structural and cyclical policies that can dampen these cycles and channel the flows to their most productive uses.