This nexus primarily comes about when a country’s banks hold huge amounts of government bonds in their books. The Bundesbank was quick to point out that the preferential regulatory treatment afforded to government bonds plays a major role in this regard.
But policymakers around the world confront related challenges and I will draw also on the postcrisis experiences of other economies. And I should make it clear that my comments today are mine alone and do not necessarily represent the views of other members of the Board of Governors of the Federal Reserve System or the Federal Open Market Committee.