During 2013 and especially in the first half of 2014, the bond markets decided that the euro crisis was over. Government debt yields generally fell across the periphery in the first few months of 2013, shrugging off the eventful bail-out of Cyprus in March. When global yields rose generally in the ‘taper tantrum’ after the Fed aired in late May the possibility of phasing out its monthly bond purchases, euro-zone states were not immune; but, significantly, spreads between the periphery countries and Germany did not for the most part widen that much and before long started to close further. There were local flare-ups, but they did not persist or cause a wider conflagration. For example, yields spiked in Portugal during a summer political crisis, when the coalition government carrying out the painful measures required under the bail-out programme looked as if it might fall apart. They then subsided when the two governing parties coalesced again after Passos Coelho, the prime minister, gave Paulo Portas, the leader of the junior party, a bigger role.

Politicians in both the core and peripheral countries were keen to declare the crisis over, even if this was imprudent. Ireland threw away its bail-out crutches in December 2013, making it the first crisis country to conclude its rescue programme on time. That ‘clean exit’ was in fact risky since both the Commission and the IMF as well as the ECB considered that Ireland would have done well to get a precautionary credit line with the ESM. The main advantage this would have conferred was eligibility for OMT since such a precautionary programme would require conditionality. That eligibility would have lasted for up to two years because the credit line could be renewed twice for six months after the initial one-year term. The counsel from the troika was disregarded for reasons both of Irish pride and of the German desire to wrap up the embarrassing rescues.

A similar alliance on the periphery and core helped Slovenia avoid the threat of a bail-out that had long hung over the country. Having seen the effects of such programmes elsewhere, the government led by Alenka Bratusek was doing its utmost to avoid becoming the sixth country to require a rescue. It was helped by the fact that Germany also wanted to avoid such an outcome.