Squeezed bank dealers quit European govt bond markets

London

A RISE in the number of banks giving up primary dealer roles in European government bond markets threatens to further reduce liquidity and eventually make it more expensive for some countries to borrow money.

Increased regulation and lower margins have seen five banks exit various countries in the last three months. Others look set to follow, further eroding the infrastructure through which governments raise debt. While these problems are for now masked by the European Central Bank (ECB) buying 60 billion euros (S$93.3 billion) of debt every month to try to stimulate the eurozone economy, countries may feel the effects more sharply when the ECB scheme ends in March 2017.