Since the start of the year, ten-year government bond yields have fallen by around 100 basis points in Portugal and 160 basis points in Greece. These declines mark a significant easing in financial conditions in an environment of downside risks to growth and imply that the ECB’s accommodative monetary policy stance is now being felt more forcefully across larger parts of the euro area.
In addition, the introduction of a delivery-versus-payment (DVP) mechanism for settlement of JGBs eliminated principal risk. Furthermore, a JGB clearing institution, the Japan Government Bond Clearing Corporation (JGBCC), accepted transactions between parties as a CCP, assumed the seller’s obligation to every buyer and the buyer’s obligation to every seller, and provided guarantee for settlement of those obligations.