Publication

This paper examines the role played by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) program in the decline in the differences between the yields of bonds with different credit ratings in the eurozone since 2012. Overall, the authors find that most of this decline is due to the positive market sentiments that the OMT program triggered and that it is not related to such factors as debt-to-GDP ratios or external debt positions, which have continued to increase in most eurozone countries. They also provide recommendations for the future of the governance of the ECB.