This is, no doubt, the truth of the matter. The opportunity for domestic investors has been so good that in the space of a week they have found A$6.3 billion to invest, more than in any other week and at a time when they are supposed to be less than flush with cash due to redemptions and little or no inflows. And while many have sold state and commonwealth government bonds to buy bank paper, why wouldn't you, when you can make up to 200 bps or more on the trade, for fundamentally the same credit risk? What is now clear is that the government guarantee is creating massive distortions in the domestic corporate bond market (and the argument continues to rage in the retail market). The CBA has proved that a guarantee is unnecessary in the domestic market and, given the obvious appetite of investors, many more bonds could have been sold without a government guarantee, if they had been available. With the massive funding task that the states have over the next few years and the likelihood that the Commonwealth may have to sell many more bonds than in the past to fund looming budget deficits, it may be best that the government guarantee of domestic wholesale funding by the banks be dropped. It should only be required for offshore funding where our banks have to compete against other government guaranteed banks.