This is against a backdrop of what appears to be a turning point for global financial markets, following an extended period of low volatility and low interest rates in the advanced economies and an absence of inflation pressures. For some time now, the world has been anticipating interest-rate normalization in the United States (US) in particular.
Unsound fiscal policies in turn would make it more difficult for monetary policy to maintain price stability at low interest rates and could lead to pressure on the central bank to “communitise” government debt through its balance sheet. The convergence of long-term interest rates to what for the countries at the euro area periphery were historically low levels had a number of implications.