Why Do the 10-Year Bond Interest Rates Vary Between Member

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The Answer is The ECB controls very short-term interest rates as part of its monetary policy. However, it does not control long-term interest rates such as those paid on 10-year government bonds. For example, the bond interest rate for Greece in March 2012 was over 20% compared to around 2.5% for UK bonds and around 2% for German bonds. Bond interest rates reflect the risk of default that the financial markets place on the bonds. Clearly Greece government borrowing is much riskier for the purchaser of Greek bonds.

Why Do the 10-Year Bond Interest Rates Vary Between Member

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Why Do the 10-Year Bond Interest Rates Vary Between Member

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Correct Answer:
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