Central Banks


  • Instruments against fragmentation only to be used in case of need
  • Hope that they won’t need to be used at all
  • We are discussing instruments that allow to bring discipline to the market – that seems to not exist whenever spreads go beyond the fundamentals

As much as the words are powerful, it will be tough for the ECB to have to ensure that the effects of tightening policy is felt evenly across the entire euro area economies. They challenged markets to “test” them and when that happened, they didn’t like it. You can’t just bring in “fundamentals” without talking about fragmentation risks as well. That’s not how it works. Pfft.

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