WRITTEN QUESTION E-2714/00 by Christopher Huhne (ELDR) to the Commission. Average cost of capital in the euro zone.
Date: 2000-09-01
Institutions: European Parliament, Provisional data
Subjects: Eurobond, Euromarket, capital market, cost analysis, euro area, type of business

13.3.2001

EN

Official Journal of the European Communities

C 81 E/215

(2001/C 81 E/275)

WRITTEN QUESTION E-2714/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Average cost of capital in the euro zone

Will the Commission please estimate whether there has been a reduction in the average cost of capital in
real terms to euro-zone enterprises as a result of the introduction of the euro and the consequent growth
of the euro-denominated corporate bond market?

Answer given by Mr Solbes Mira on behalf of the Commission

(19 September 2000)

The euro bond market is undergoing fundamental changes as a consequence of the introduction of the
euro, technological change and globalisation. The introduction of the euro unified eleven national markets
into a single, fundamentally more homogeneous, euro area bond market. These features have been the
driving force behind the developments in the euro bond market, creating greater transparency, enhancing
competition among financial institutions, and promoting the development of a broader and more liquid
bond market which foster securitisation and disintermediation. These factors all work to enhance the
availability and lower the cost of capital to euro area enterprises.

1999 saw a tremendous increase in private sector issuance of debt, in particular in the corporate bond
sector where issuance increased almost four-fold compared to 1998. The significance of developments on
corporate bond markets stems from the fact that the Community financial system is predominantly bank-
oriented, as opposed to the more market-oriented system in the United States. The development of the
corporate bond market, providing an alternative to traditional bank financing, is greatly facilitating the
extensive and on-going restructuring of European industry. The growth of the corporate bond market will
therefore have important consequences for the financing of the economy in general and mergers and
acquisitions activity and corporate restructuring in particular.

(2001/C 81 E/276)

WRITTEN QUESTION E-2715/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Price alignment in the euro zone

Will the Commission please examine the evidence that there has been an alignment of prices for similar
goods and service within the euro zone in anticipation of the transparency which will reach full effect in
the first six months of 2002?

How significant has this alignment been?

How much further is it likely to go, and is it likely to alter significantly the relationship between price
developments and growth?

Answer given by Mr Solbes Mira on behalf of the Commission

(21 September 2000)

The Commission is examining the alignment of prices for similar goods and services within the
Community in general and the euro zone in particular on a continuous basis. The results of these
investigations are presented in various reports and studies (1).