How high would long-term interest rates be today in Germany, France, Spain and Italy if the ECB’s monetary policy was “normal�
We assume that monetary policy in the euro zone were “normal†(based on past standards) and estimate hypothetical current levels for : The ECB’s key interest rates; Germany’s 10-year interest rate; The sovereign yield spreads of France, Spain and Italy, given their public debt ratios. In a “normal†situation, 10-year interest rates would be: 2.2% in Germany; 3.8% in France; 3.8% in Spain; 5.1% in Italy . This would pose a fiscal solvency problem.