initiatives. by reducing the number of key players and by strengthening the awareness of each player to take up their respective responsibilities, the euro will – over time – contribute to facilitating the process of international cooperation. conclusions the euro acquired the status of an international currency from the time of its introduction as a result both of the characteristics of some of its legacy currencies and of the large size of the euro area economy and financial markets. how and to what extent the international use of the euro will evolve in the future remains rather more open. an increasing international role of the euro in the years to come can certainly be expected, even though such a process will take time and will not affect the main international uses of the euro to the same extent. the internationalisation of the euro will to a large extent depend on the creation of a large, unified and efficient capital market in the euro area. its possible challenges appear to be manageable, in particular those with regard to the eurosystem ’ s monetary policy. from an international perspective, the euro as a stable currency opens up new opportunities for international agents, and maintaining price stability in the euro area is also the best contribution the eurosystem can make to global stability.

increasingly focused on the euro with implications for its international use. a second factor relates to the euro area financial market. the acceptance and use of the euro by foreign agents are to a large extent determined by the efficiency and integration of the euro area money and capital markets. in this connection, progress has been made, especially with regard to those sectors of the financial system which are used as the primary channels for the operation and transmission of the single monetary policy. thus, thanks to the target system, money markets are now close to perfect integration, given that the spreads amongst euro area countries are extremely low and reflect different credit standings of counterparties rather than market segmentation. in clearing, settlement and trading systems for securities, integration is not quite as complete as in money markets, but a process is under way to create a euro area - wide financial infrastructure by linking existing national systems. in government bond markets, segmentation may not be eliminated completely since, as you know, each member state remains responsible for its own fiscal and public debt management policy. therefore, public bonds in the euro area will continue to be characterised by yield spreads which reflect mainly the differences in the credit standing of sovereign national issuers and in market liquidity conditions. however, the ongoing integration of financial markets in the euro area as well as increasing competition amongst intermediaries are likely to bring about greater liquidity, lower transaction costs and the development of a wider array of financial products. as this process develops, the international use of the euro is likely also to benefit from it. i would like to mention a last aspect of the internationalisation process of the euro. this refers to the possibility that the large size of the euro area as well as its lower trade openness, as compared with the participating member states, might contribute to reducing the vulnerability of its economy and financial markets to possible external shocks, making euro area developments less correlated with trends prevailing abroad. against this background, euro - denominated assets would provide international investors with an opportunity to diversify their portfolios, enhancing the risk - return profile thanks to the pooling of not closely correlated assets. the development of the euro as an international currency is not likely to be a steady process. the possible increase in the international use of the euro may not be rapid in early years until a critical threshold is reached attracting more and more international agents. besides, the euro is probably going to develop faster as an international store of value than as an international transaction and pricing instrument. furthermore, the reaction