Fragmentation of financial markets along national lines in the euro area has progressively receded after the announcement of the OMT programme in the summer of 2012, but is still present. Firms’ and households’ borrowing costs in stressed countries are still higher than average, mainly reflecting the larger credit risk.
For example, in July the cost of new bank loans for Italian non-financial corporations remained 60 basis points higher than the euro area average. The response of monetary policy has been wide-ranging.