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Traders work at the German stock exchange in Frankfurt. The yield spread between German and Italian bonds has fallen from a crisis peak of 530 basis points to 280 basis points.
Traders work at the German stock exchange in Frankfurt. The yield spread between German and Italian bonds has fallen from a crisis peak of 530 basis points to 280 basis points.
(MARTIN OESER/AP)

BREAKINGVIEWS

Euro zone spread monster isn’t dead, it’s just resting

Reuters Breakingviews delivers agenda-setting financial insight. Its global correspondents react to stories as they develop, delivering sharp and provocative commentary on big financial news as it breaks. Click here to read more international insights.

The euro zone crisis has tuned to a slow burn. Government bond spreads now discipline, rather than terrorize governments. But they can still hurt local economies and are, by several measures, higher than they should be. It shows the success, and limits, of ECB policy.