First, the importance of the capital markets has increased compared to bank-based intermediation. And second, competition among banks - at least on a national level - and between banks and capital markets has intensified.
Concerning investors, there has been a noticeable increase in the share of wealth of private households and firms that is both liquid and traded.51 As a result, investors may now be more sensitive to market movements in general. Expectations about future inflation rates, shocks to the real sector and risk premiums are some of the factors influencing long-term interest rates.