Occasional papers published in 2000

Communication device to a broad audience

Our Occasional Paper Series (OPS) disseminates work carried out by, as a rule, ECB staff on subjects that relate to the main tasks and functions of the ECB and the ESCB. Occasional Papers (OPs) are addressed to a wide audience, including other policy-makers, financial analysts, academics, the media and the interested general public. Understanding the papers will normally require some prior knowledge of the topic.

No. 1
28 July 2000
The impact of the euro on money and bond markets

Abstract

JEL Classification

F36 : International Economics→International Finance→Financial Aspects of Economic Integration

E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy

G15 : Financial Economics→General Financial Markets→International Financial Markets

O16 : Economic Development, Technological Change, and Growth→Economic Development→Financial Markets, Saving and Capital Investment, Corporate Finance and Governance

Abstract

The paper provides an analysis of the euro area money and bond markets and their infrastructure since the introduction of the euro. Significant development in terms of integration took place in both markets in general to a various degree for the different segments. However, there remain room for further integration after the first year of Stage III of EMU notably regarding the bond market which lags behind in terms of liquidity, market completeness and overall size compared to the US corporate bond market. Analysis of the barriers to integration, which do not seem to be specific to these markets but apply more generally to euro securities infrastructure, identifies fields where further action is required. This covers (i) the lack of availability of cross-border settlement on a DVP basis, (ii) the lack of standardised legal documentation for repos, (iii) the lack of common practices concerning settlement procedures, (iv) the lack or harmonisation of collateralisation processes between national central banks and interbank operations, (v) the heterogeneity in fiscal and accounting procedures and, (vi) the need for a clearing house.

Disclaimer: Please keep in mind that OPs are published in the name of the author(s). Their views do not necessarily reflect those of the ECB.