We should recall that these uncertainties may have been compounded by the regime shift associated with the transition to Stage Three of Economic and Monetary Union. The changeover to the single currency may have altered the way expectations are formed in the euro area. It may thus have changed the effects of monetary policy on financial behaviour, consumption, investment and wage bargaining. Or, to summarise, it may have changed the very nature of the monetary transmission mechanism in the euro area. Moving to more general issues associated with the introduction of the euro, there is no doubt that this regime shift is acting as a powerful catalyst for economic growth and restructuring in Europe.
Several forces are at work.
Price transparency has significantly improved both across countries and over time. Moreover, the single currency provides an impetus for the development and the integration of financial markets in Europe. This in turn will contribute to a more efficient allocation of savings across Europe. The development and the integration of capital markets in Europe have been fostered for some time now by financial liberalisation, globalisation and technological innovation. The introduction of the euro is giving this trend a significant boost in Europe.