European governments were able to affect banks' bond holdings by a form of "moral suasion" during the sovereign debt crisis, a paper published by The Netherlands Bank argues.

In The invisible hand of the government: "Moral suasion" during the European sovereign debt crisis, Steven Ongena, Alexander Popov and Neeltje Van Horen examine whether governments use some form of persuasion to ensure domestic banks subscribe to their bond issues.

The authors use the European Central Bank's new individual