Therefore, and against the background of the Single Rule book, it is important to give sufficient national discretion and flexibility to national macro-prudential authorities when it comes to the actual use and calibration of instruments. At the same time, national authorities may be subject to political pressure. They are at risk of acting too little or too late in addressing risks to financial stability.
In addition, yield spreads to Germany widened considerably in a number of European countries, cf. Chart 2. This reflected a flight-to-quality, as the German bond market is considered to be the most liquid in Europe. In addition, investors attributed higher credit risk premiums due to increasing concerns about fiscal sustainability in view of the rapidly growing budget. Since mid-2009 the primary markets have improved.