After the shock in September 2008, liquidity in the secondary market dried up, resulting in a significant widening of bid-ask spreads and a dramatic reduction of volumes, cf. Chart 3. The situation has improved in 2009 with a narrowing of bid-ask spreads, but the secondary markets have still not normalised. It is important to restore transparency and confidence in the government bond market.
Some countries are successfully bringing more competition in the secondary market by implementing market making obligations based on relative performance among primary dealers instead of fixed maximum spreads and minimum volumes. Future challenges Over the summer, the financial markets have been characterised by stronger confidence in real economic developments, and the extensive political measures have contributed to increasing the risk appetite of investors.