We have thus seen a swelling of the balance sheet, as some of the assets managed by the pension companies are merely deferred tax, and the trend towards positive net disbursements entails the gradual realisation of the government's tax asset. On the other hand, this trend will increase spending power as a ratio of production output from today's level.
Did this sizeable gap reflect different perceptions of the credit risk of these two AAA-rated sovereign issuers or did it reflect the effects of differences in market liquidity conditions? An answer is provided in the ECB Financial Integration Report by examining the difference in agency bond yield spreads in these two countries.