What will happen if there are virtually no more risk-free government bonds?

Investors consider the government bonds of the United States, the United Kingdom, Germany, France and Japan to be risk-free assets. For a government bond to not have any default risk, the country’s government must be on a path of medium-term fiscal solvency or be able to return to that path at any time by raising the tax burden or by monetising debt. But if debt monetisation is the method used, there may not be any default risk but the country’s exchange rate will most likely be at risk of depreciating. Moreover, debt monetisation is not an option for euro-zone countries taken individually. Ultimately, the only government bonds that seem to be free of risk (default or currency risk) are those of the United States, Germany and the United Kingdom. If few risk-free bonds remain, their long-term interest rates will become increasingly low .