-  increased competition between issuers, which has encouraged the standardisation of sovereign bonds, the gradual convergence towards “best practices”, the development of a range of attractive and actively traded benchmark issues (especially for sovereign bonds). Besides, competition has also enhanced liquidity as issuers have increased the average size of outstanding bonds. -  the modernisation of market structures: besides the rapid development of electronic trading, the consolidation of Central Securities Depositories is also paving the way for a more efficient functioning of Delivery-versus-Payment procedures, and easier and safer channels of settlement of cross-border securities transactions. This last point is of particular relevance for the Eurosystem, as the smooth functioning of European securities settlement infrastructure is key for the practical implementation of monetary policy. On the equity market, the elimination of the currency risk within the euro area has led investors to shift from a domestic orientation to a more international, sectoral one. The creation of a wide range of pan-European sectoral indices was, thus, a direct consequence of these changes in investor strategies. Additionally, the introduction of euro has been a strong catalyst for mergers and acquisitions in the financial sector. For instance, in this respect, we can stress current trends in mergers or close co-operation between banks, stock exchanges, securities settlement systems, clearing houses. Had the euro not been created, would it have been thinkable that the Paris, Brussels and Amsterdam exchanges merge to create EURONEXT ? The large European goods and services market.

Over the last two decades, China has grown into one of the two largest economies in the world. At the same time, authorities are constantly announcing new steps to increase the renminbi (RMB) convertibility and develop its use in international transactions. It is therefore natural to wonder whether the RMB will emerge as a major international currency in the foreseeable future. In line with my introductory remarks, I will refrain from any geopolitical speculation on this question and present a few technical – and personal – remarks on the nature of a global currency. What does it take to become a reserve currency? It is generally assumed that this status brings important privileges, some of them “exorbitant”. It is also forgotten that it comes with significant obligations. First, being a reserve asset means that the currency enjoys full and unconditional capital account convertibility towards both residents and non-residents. The economy is therefore fully integrated with global capital markets and fully exposed to external financial shocks. This creates a very demanding environment. Convertibility essentially means that you accept the judgment of “foreigners” as to the true value and purchasing power of your domestic currency. Although it is not often perceived as such, it entails some abandonment of sovereignty, through the loss of some independence in monetary policy. This is the famous “Mundell trilemma”: no country can simultaneously have a fixed exchange rate, full capital  2  BIS central bankers’ speeches  convertibility and monetary policy independence. Indeed, all reserve currencies today have fully flexible exchange rates.