Europe Witnesses Fluctuations in Interest Rates and Bond Yields
Published By : 02 Mar 2015 |Published By : QYRESEARCH
Several borrowers in Europe are at present witnessing a financial situation that is rather strange denoting a certain suspension of the general rules of finance all together. During the current week, Germany was lent close to US$4 billion by investors; and it was very well known to the investors that there was a low possibility that they would finally be repaid.
Recently, Nestle issued bonds in the financial market for a value which was greater than what the company is worth. Such impractical and unexpected business deals show the dark point of view of the economy thereby throwing light on some of the desperate measures being resorted to, by the policy framers who have gone up the extent of taking the rates of interest way below zero in order to give a boost to spending and borrowing. In such a situation, the most straightforward tasks in banking have become problematic and have created a certain curiosity.
Mortgages and consumer loans with negative rates of interest are a rather rare situation. Several such situations in finance are occurring all over Europe. A drastic and serious measure was resorted to, by some of the policy makers of Europe in order to revive the economy of Europe. And these measures were quite similar to measures that were tried and tested by many central banks. The ECB (European Central Bank) that frames and implements policy for the eurozone which consists of 19 countries had declared a certain plan which involved the printing of money in order to purchase several billion Euros worth of government bonds. The very expectation brought about by the program made the prices of many bonds to decline and also cause a fall in the value of the Euro.