In addition, while the US market is integrated, the short-term securities markets in Europe continue to be segmented, with de facto several markets based in several market places. Issuers and investors in the European short-term paper markets therefore face reduced depth and liquidity and less diversification opportunities than in the US. I now turn to the government bond market.
Our indicators of the integration in government bond markets encompass the standard deviation of government bond yield spreads, measures based on regressions, such as the evolution of beta coefficients, and variance ratios. Government bond markets have achieved a very high degree of integration, mainly due to the disappearance of intra-euro area exchange rate risk.