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The impact of the euro on money and bond markets

Author

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  • Javier Santillán
  • Marc Bayle
  • Christian Thygesen

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.

Suggested Citation

  • Javier Santillán & Marc Bayle & Christian Thygesen, 2000. "The impact of the euro on money and bond markets," Occasional Paper Series 1, European Central Bank.
  • Handle: RePEc:ecb:ecbops:20000001
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    References listed on IDEAS

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    1. Anderton, Robert & Skudelny, Frauke, 2001. "Exchange rate volatility and euro area imports," Working Paper Series 0064, European Central Bank.
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    3. Gabriel Pérez Quirós & Hugo Rodríguez, 2000. "The daily market for funds in Europe: Has something changed with the EMU?," Economics Working Papers 474, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Gros, Daniel, 1998. "EMU and Capital Markets: Big Bang or Glacier?," International Finance, Wiley Blackwell, vol. 1(1), pages 3-34, October.
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    Cited by:

    1. Wolswijk, Guido & de Haan, Jakob, 2005. "Government debt management in the euro area - recent theoretical developments and changes in practices," Occasional Paper Series 25, European Central Bank.
    2. Vesala, Jukka & Poloni, Paolo & Mörttinen, Leena & Sandars, Patrick, 2005. "Analysing banking sector conditions - How to use macro-prudential indicators," Occasional Paper Series 26, European Central Bank.
    3. Hartmann, Philipp & Manna, Michele & Manzanares, Andres, 2001. "The microstructure of the euro money market," Journal of International Money and Finance, Elsevier, vol. 20(6), pages 895-948, November.
    4. Gajewski, Krzysztof & Olszewski, Krzysztof & Pawłowska, Małgorzata & Rogowski, Wojciech & Tchorek, Grzegorz & Zięba, Jolanta, 2012. "Integracja finansowa w Europie po wprowadzeniu euro. Przegląd literatury
      [Financial integration in Europe after the introduction of the euro. A literature overview]
      ," MPRA Paper 42482, University Library of Munich, Germany.
    5. Degryse, H.A. & Nguyen, G., 2004. "Interbank Exposures : An Empirical Examination of Systemic Risk in the Belgian Banking System," Discussion Paper 2004-4, Tilburg University, Center for Economic Research.
    6. Willman, Alpo & Whelan, Karl & Altissimo, Filippo & Georgiou, Evaggelia & Sastre, Teresa & Valderrama, Maria Teresa & Sterne, Gabriel & Stocker, Marc & Weth, Mark, 2005. "Wealth and asset price effects on economic activity," Occasional Paper Series 29, European Central Bank.
    7. Forssbaeck, Jens & Oxelheim, Lars, 2007. "The transition to market-based monetary policy: What can China learn from the European experience?," Journal of Asian Economics, Elsevier, pages 257-283.
    8. Sturm, Michael & Siegfried, Nikolaus, 2005. "Regional monetary integration in the member states of the Gulf Cooperation Council," Occasional Paper Series 31, European Central Bank.
    9. Enderlein, Henrik & Lindner, Johannes & Calvo-Gonzalez, Oscar & Ritter, Raymond, 2005. "The EU budget - how much scope for institutional reform?," Occasional Paper Series 27, European Central Bank.
    10. Marján, Attila, 2003. "A monetáris unió hatása az európai tőkepiacokra
      [The effect of monetary union on European capital markets]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 800-818.
    11. Melnik, Arie & Nissim, Doron, 2006. "Issue costs in the Eurobond market: The effects of market integration," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 157-177, January.
    12. Dierick, Frank & Pires, Fatima & Scheicher, Martin & Spitzer, Kai Gereon, 2005. "The New Basel Capital Framework and its implementation in the European Union," Occasional Paper Series 42, European Central Bank.
    13. Hartmann, Philipp & Issing, Otmar, 2002. "The international role of the euro," Journal of Policy Modeling, Elsevier, vol. 24(4), pages 315-345, July.
    14. Thimann, Christian & Bracke, Thierry & Wölfinger, Regine & Bessone Basto, Rita & Hollensen, Ole & von Stenglin, Stephan & Fernández de Lis, Santiago & Weber, Pierre-François & Committeri, Marco & Paul, 2005. "Managing financial crises in emerging market economies - experience with the involvement of private sector creditors," Occasional Paper Series 32, European Central Bank.
    15. Schönenberger, Andreas & Schmiedel, Heiko, 2005. "Integration of securities market infrastructure in the euro area," Occasional Paper Series 33, European Central Bank.
    16. Patricia S. Pollard, 2001. "The creation of the Euro and the role of the dollar in international markets," Review, Federal Reserve Bank of St. Louis, issue May, pages 17-36.
    17. Herrmann, Heinz, 2001. "The German financial system and European monetary union," Journal of Asian Economics, Elsevier, pages 37-46.
    18. Brown, Alessio J. G. & Žarnić, Žiga, 2003. "Explaining the increased German credit spread: The role of supply factors," Kiel Advanced Studies Working Papers 412, Kiel Institute for the World Economy (IfW).
    19. Martin, Reiner & Roma, Moreno & Vansteenkiste, Isabel, 2005. "Regulatory reforms in selected EU network industries," Occasional Paper Series 28, European Central Bank.
    20. Avadanei Andreea, "undated". "The Implications Of Economic And Monetary Union In Sustaining European Money Market Integration," Description: Managerial Challenges of the Contemporary Society 1, Faculty of Economics and Business Administration, Babes-Bolyai University.
    21. Stéphanie Stolz, 2002. "Banking Supervision in Integrated Financial Markets: Implications for the EU," CESifo Working Paper Series 812, CESifo Group Munich.
    22. Paolo Emilio Mistrulli, 2003. "Le emissioni delle banche italiane sull' euromercato," Moneta e Credito, Economia civile, vol. 56(224), pages 461-480.

    More about this item

    Keywords

    money market; bond market; securities market; financial market integration; euro area; monetary policy.;

    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, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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