Banks lend to each other at 2% a year, but won't lend money to the state at 7%

Banks grant each other loans in RON at interest rates of 2% a year these days, but paradoxically the state has not managed to borrow even a quarter of the planned 4.6 billion RON in June, although it paid yields of up to 7% a year, up from previous months.
"Firstly we have to consider relevant intervals, not overnight interest rates, which refer to the current period, where we have excess liquidity. There is a relevant secondary market, where banks, investment funds, and insurance companies are present, there government bond yields exceed 7% a year," comments the treasurer of a major local bank.
At the beginning of the week dealers rushed in to make one-week deposits with the NBR (National Bank of Romania) at 6.25% a year, with the cumulated offers exceeding six times the maximum level announced. On the same day the Treasury raised only 330 million RON by selling one-year T-bills, a quarter of what it had planned to, but paid a maximum 6.98% yield per year.
"Although it paid a yield 20 basis points higher than that at which similar securities were traded on the secondary market, the Finance Ministry found it hard to access funds. This is alarming and shows that funding costs will rise in the future, as we were expecting, but contrary to the minister's wish to see a yield stabilisation," comments Vlad Muscalu, ING Bank analyst.