Ageing populations and increasing private provisioning of pensions in many euro area countries, as well as accounting changes and balance sheet repair, have forced financial institutions to resort to longer-term bonds in order to correct maturity mismatches in their balance sheets.
The chart on the right of slide 6 illustrates how net purchases of long-term bonds relative to quoted shares has sharply diverged since 2002. Insofar as the declining bond yields reflect such structural factors, the potential for a reversal of the trend, should it happen, could take place more gradually than previously feared.