I am all the more satisfied because ALGAFI gave me the opportunity to discuss an extremely interesting issue, namely the interplay between monetary and fiscal policy in EMU. For obvious reasons, I will not refer to the specific case of Luxembourg but will instead primarily talk about the European Monetary Union (EMU) as a whole.
The yield curve, ie the spread between long-term and short-term rates, is exceptionally steep. This naturally allows substantial income to be generated from maturity transformation (see Chart 1). Income from commissions and fees has also soared recently, partly on the back of the large-scale issuance of government bonds which the public sector has been obliged to launch in response to the financial crisis.