Nonetheless, the scale of the decline in those rates for the peripheral countries has not been sufficiently large to narrow the gap with those rates in the core countries (Chart 1).
This is mainly because the vicious cycles between sovereign and financial stresses – and  BIS central bankers’ speeches  1  their repercussions on the real economy – have not been curtailed in the peripheral countries. The high bank lending rates in the peripheral countries are closely associated with the highrisk premiums charged on the yields on their sovereign bonds by investors.