Bond markets Government bonds The bond markets are nearly as integrated as the money markets. This is largely due to the elimination of exchange rate risks and the convergence of inflation expectations across the euro area. The standard deviations of government bond yield spreads have declined from figures above 200 base points in the mid-1990s to close to zero.
The concerns can be justified only if there is a mismatch between the effective supply of securities and the intended scale of our purchases. If that is the case, there will be no price that can clear supply and demand, and this would prevent us from buying the desired amounts. Concerns about the potential scarcity of bonds are based on three main factors.