indicator of the progress already made in the integration of euro area stock markets. the euro area capital market is larger and more open than any of the domestic markets and provides investors with more varied opportunities for investment, but it is not yet fully integrated. there are still some barriers : for example different traditions and local market practices, national regulations and tax regimes. one major obstacle to the efficient functioning of financial markets is also the prevailing segmentation of financial markets in europe. so, while the introduction of the single currency was a major step towards integration, the high degree of segmentation in europe ’ s securities markets remains one of the primary reasons for structural weaknesses. allow me to illustrate this by providing an example : there are currently more than 20 different securities settlement systems in the euro area operating on different trading and clearing platforms. in other words, the euro area lacks a sufficiently integrated system for the clearing and settlement of securities and for managing collateral at the cross - border level. but market pressure is growing and the securities settlement systems are faced with increasing demands for consolidation. … the euro, in tandem with technological progress and continuing globalization, has put more pressure on european exchanges to strive for structural improvements. we should also be aware that the process of consolidation of stock exchanges is taking place within the context of the integration of capital markets in the euro area. this allows exchanges to benefit from increased economies of scope and scale they may obtain by using new information and telecommunication technologies. since the introduction of the euro several initiatives have been launched by stock exchanges with a view to forming alliances or merging activities. the recent flurry of excitement about the future of the london stock exchange gives an indication of just how important the push to consolidate europe ’ s stock exchanges has become. the increase in m & a activity is a sign of the competition between business and financial locations due to changing market conditions and the increasing competitive pressures to which the different financial intermediaries are exposed. further efforts must be undertaken to remove the remaining segmentation and harmonize market architectures, accounting rules and tax treatment. several initiatives are already under way and progress is being made on the harmonization of market practices ; here, eg the “ financial market action plan ” of the european commission comes to mind, and national governments and european market organizations have been working towards these goals. an important recent initiative was the decision of the ecofin - council to establish a committee of wise men in order to identify the obstacles which stand in the way of a single market in securities and consider

maintaining price stability, the ecb almost automatically fosters the attractiveness of the euro as an international currency. the commitment of the ecb to primarily pursue price stability remains a key factor behind market confidence in the euro as a stable currency. … two factors are likely to determine the international role of the euro. first, the size factor : a broad, deep and liquid euro area capital market with lower transaction costs facilitates the development of the euro as a vehicle currency for trade and commodity pricing and may eventually lead to greater use of the euro in the future. second, the risk factor : if international investors and issuers consider the euro to be a stable currency, they will hold euro assets to minimize risk in their internationally diversified portfolios. there has been a considerable increase in private issuance activity in the euro area. the european corporate bond market posted significant gains in 1999, although it should be taken into account that temporary or exceptional factors may have been partly responsible for this. however, this trend has continued in 2000. the rising number of companies with relatively low ratings shows that it has become easier for firms to tap the capital market. indeed, the integration and deepening of the capital markets are particularly beneficial to smaller companies in need of venture capital. the newly created euro - denominated bond market is better able to absorb very large issues than the individual bond markets of the euro ’ s predecessor currencies. indeed, the average size of new bond issues increased considerably in 1999, reflecting the investors ’ growing preference for deep and liquid instruments. in line with the trend towards higher average issuing volumes, austria also recorded re - openings of government bonds aimed at boosting liquidity. emu has contributed positively to this development, and the single currency has been facilitating the standardization of debt instruments and has been driving a continued reduction in transaction costs. progress in the harmonization of market standards, practices and conventions across the euro area is reflected in the increased market liquidity, the broader maturity spectrum and the development and spread of new financial products. … let me now turn to the stock market where we have observed an increase in new listings : in the course of 1999 close to 900 companies were newly listed on stock exchanges in the euro area, which represented an increase of some 40 % compared with 1998. the growth rates in the “ new market ” segments seem to reflect the enhanced attractiveness of going public in the euro area. furthermore, the development of a range of euro area - wide stock market indices is an obvious