Whereas the interest on German 10-year government bonds has been decreasing, several European countries now face higher interest rates, which can partially be explained by the soaring demand for liquidity, which is of course highest for German papers.
The rather unusual increase of the interest spread of Austrian sovereign debt versus Germany has in addition been associated with the exposure of Austrian banks in Central and Eastern Europe. 4  Widely quoted statement by Chuck Prince, then CEO of Citigroup, in a FT interview July 9, 2007 “When the music stops, in terms of liquidity, things will be complicated.