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Trillion-Dollar Punishment Makes European Buyers Pay for Safety

Mario Draghi, left, President of the European Central Bank and vice president Vitor Constancio, right, leave the first press conference following the monthly ECB board meeting in the new ECB headquarters on Dec. 4, 2014 in Frankfurt am Main, Germany.

Mario Draghi, left, President of the European Central Bank and vice president Vitor Constancio, right, leave the first press conference following the monthly ECB board meeting in the new ECB headquarters on Dec. 4, 2014 in Frankfurt am Main, Germany.

Photographer: Thomas Lohnes/Getty Images

Investors across the globe are facing a trillion-dollar dilemma: either pay up for the safety of lending to nations like Germany and Switzerland, or buy riskier debt at a time of faltering economic growth.

The question plagues asset managers who are waking up each morning to find that the yields on more and more of their holdings have turned negative -- meaning they’re effectively paying governments to borrow. The volume of such debt has swelled to 1.4 trillion euros ($1.62 trillion) from 500 billion euros in October, Bank of America Corp. data show.