It may be hard to believe at this juncture, but in the euro area, every country issued bonds at the same level as Germany up until a few years ago. Of these two reasons, I believe that the first one is more convincing as an explanation of why a severe fiscal situation does not lead to higher bond yields in the market.
Universal margin requirements  These sorts of regulatory-arbitrage concerns have motivated some academics and policymakers to think about a system of universal margin requirements for SFTs.12 In its simplest form, the idea would be to impose a minimum haircut, or down payment requirement, on any party – be it a hedge fund or a broker-dealer – that uses short-term collateralized funding to finance its securities holdings.