<p><i>German bonds placed as a reference in the eurozone</i> is a form of tacit understanding and i don't think you will find official conventions about this. This practice comes from market Finance pricing technics, as the <a href="https://en.wikipedia.org/wiki/Capital_asset_pricing_model" rel="nofollow noreferrer">CAPM</a>, which use a risk (-free-rate) referential to price different kind of assets. Given the higly positive trade balance of Germany, the stability of its revenue base, etc... the country is seen by financing markets as higly creditworthy, <i>i.e.</i> viewed as the "most risk-free" of the eurozone.</p>

CC BY-SA 4.0
2019-10-17T11:39:48.103Z
Any question @Nox ?
keepAlive
CC BY-SA 3.0
2017-02-20T13:56:42.827Z
2017-02-20T13:56:42.827Z
keepAlive
<ul>
<li>Germany is the largest Eurozone economy. </li>
<li>Most of the time German government bonds has lower interest rates than other large economies such as France or Italy or Spain.  </li>
<li>Germany has a liquid bond market, facilitating its use as a benchmark.  </li>
</ul>

CC BY-SA 3.0
2017-02-20T21:31:59.427Z
2017-02-20T21:31:59.427Z
Henry
<p>I can't find the source, either on the the ECB homepage or any other internet source to verify why German bonds are used as a reference point in the eurozone when talking about risk spreads for other European bonds. </p>

<government-debt><bonds><euro-area><germany>
Why are German bonds used as the reference for the calculation of Eurozone bond spreads?
Nox
# Why are German bonds used as the reference for the calculation of Eurozone bond spreads?

(Asked by: username_0 on 2017-02-20)

I can't find the source, either on the the ECB homepage or any other internet source to verify why German bonds are used as a reference point in the eurozone when talking about risk spreads for other European bonds.

**Tags:** government-debt, bonds, euro-area, germany


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## 2 answers

### Answer by username_1 on 2017-02-20. Score: 3

*German bonds placed as a reference in the eurozone* is a form of tacit understanding and i don't think you will find official conventions about this. This practice comes from market Finance pricing technics, as the [CAPM](https://en.wikipedia.org/wiki/Capital_asset_pricing_model), which use a risk (-free-rate) referential to price different kind of assets. Given the higly positive trade balance of Germany, the stability of its revenue base, etc... the country is seen by financing markets as higly creditworthy, *i.e.* viewed as the "most risk-free" of the eurozone.

> **Comments:**
> **username_1**: Any question @username_0 ?  

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### Answer by username_2 on 2017-02-20. Score: 0

* Germany is the largest Eurozone economy.
* Most of the time German government bonds has lower interest rates than other large economies such as France or Italy or Spain.
* Germany has a liquid bond market, facilitating its use as a benchmark.


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