Rue de la Banque no. 28: Changes in financial fragmentation in the euro area since 2008

There is said to be financial fragmentation when bond issuers located in the so-called “periphery” face higher credit risk premia than issuers with the same characteristics located in the “core” countries. This financial fragmentation peaked during the sovereign debt crisis and has receded since the announcement of the Outright Monetary Transactions (OMTs) programme by the ECB.