Access Investments-European Union- ROMANIA

So there you have it - QE and ZIRP ( Zero interest-rate policy (ZIRP) is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan)didn't solve anything, they merely delayed the inevitable and allowed an even bigger bubble to be blown, thus ensuring that the next crash is even bigger than the last one.  Let's hope that Gordon Brown is within ear-shot of the Bat-phone so he can save the world again when the time comes.  I'd love to know what sort of investor buys $131 billion worth of 'junk' bonds, though. Were they addicted to CDOs and other financial WMDs?  Well, bonds are really designed to be bought and held to maturity. The yield of any particular bond will contain a premium for the creditworthiness of the issuer, a term premium dependent on the maturity of the bond (lenders expect to be compensated for locking their money up for longer) and will also encapsulate the markets expectation for the future direction of short term interest rates.  Because the bond price already takes into account the market expectation of movements in short term interest rates, there shouldn't really be any desire to sell when interest rates move up as expected - but investors don't tend to think rationally or act rationally. As the article points out, when rates do start to rise, investors not acting rationally will want to sell bonds or redeem investments in bond funds. In order for them to sell, somebody needs to buy.  Unless you can find another investor happy to buy at the same time somebody wants to sell, the market will work more smoothly if there are liquidity providers happy to bridge that timing gap. Historically, banks tended to be those liquidity providers. They are used to taking on credit risk and can hedge if required. Managing the term premium is not too much of an issue - after all banks always lend long and borrow short, so can manage that risk. Plus they can also manage and hedge the expectations of the future direction of short term rates.  Of course, the liquidity providers expect to be paid for what they do, either by charging a bid/offer or indeed being paid directly by an exchange for committing to make markets. Having sufficient numbers of liquidity providers drives those costs down and also results in a very liquid, sharply priced market for end users.  Now that banks have been discouraged from that role (because it is viewed by some as a 'casino' operation), there is a fear that the market will be less liquid with investors being unable to buy and sell at very tight prices in sizes they need to transact in.