of outstanding amounts, the euro - denominated bond market is still significantly smaller than that denominated in us dollars. but in terms of new issuance, both markets are on a par. one reason for that is the sharp rise in the new issuance of corporate bonds. here again, diversification within the euro area has increased. the issuers'nationality, as a determinant of the yield and performance of bonds, has been superseded by other factors, especially by a sectoral view. accordingly, investors in the equity markets have shifted their perspective from country benchmarks to pan - european sector benchmarks. european equity markets are still small compared with those in the usa. the market capitalization of domestic shares, as a ratio of gdp, reaches about 90 percent [ 2000 ]. the matching figures for the usa and japan are 152 percent and 68 percent, respectively. equity markets in the euro area are growing fast. the ratio of new issuance to market capitalisation averages over 4 percent. this is twice as much as has been achieved in the usa or japan. further integration of equity markets in europe is being hampered by the segmentation of both stock exchanges and clearing and settlement systems. a consolidation process has started, and should be fostered by legal harmonization in the field of financial services. the degree of integration in the banking sector is mixed. on the one hand, wholesale markets and investment banking are largely integrated. on the other hand, commercial credits and retail banking still operate in national, segmented markets. only a few european banks created by cross - border mergers start to offer retail services at a standardized level for customers in more than one country. the financial system in the euro area is still highly bank - dominated. at the end of last year, credit financing totaled about 108 percent of gdp. this is twice as much as in the usa. the same ratio holds for deposits. in the euro area, they account for 80 percent of gdp, while the us figure is about 40 percent. however, capital markets are increasing in importance in the euro area. disintermediation is gaining ground. financial markets have boomed in recent years and investment banks ( as well as non - bank financial firms like institutional investors, pension and investment funds ) have enlarged their market share. disintermediation will be enhanced by the need for pension systems to rely more on funded retirement schemes. disintermediation will change the transmission process. basically, it is speeded up

ernst welteke : the introduction of the euro as a historic event speech by mr ernst welteke, president of the deutsche bundesbank, at the european american business council, washington, 19 november 2001. * * * i ladies and gentlemen, it is an honor for me to be here in washington today. i would like to thank you for your kind invitation, which gives me an opportunity to discuss european monetary union with so distinguished an audience. before i come to my main point, i would like to assure you that i feel close bonds with the people of the united states in these troubled times. if you type “ historic event ” into your favorite internet search engine, you will get about 40, 000 responses. well, of course, i did not check all the sites suggested, but be assured that there is quite a wide variety of “ historic events ”. the introduction of the euro was not among the top twenty hits of that search, though. in discussing the historic dimension of the introduction of the euro today, we are not exactly walking a well - trodden path. however, as i will make plain today, that introduction is a historic event. ii the three large currency areas in the world — the united states, japan and the euro area — together account for almost one - half of world output. those three entities share a lot of similarities, but they are strikingly different in some respects. in terms of population size, the united states and the euro area are quite similar, around 300 million people, while japan is a little less than half that size. in terms of the share in world gdp, japan is less than 10 percent, the euro area comes out in the middle, at 16 percent, while the usa accounts for rather more than one - fifth of world gdp. per capita gdp, however, in the usa and japan is about 50 percent higher than the euro area ’ s ε 20, 000 per head. ranked by openness — external trade in relation to gdp — the euro area is the most open of the three large currency areas, with its current account roughly in balance. the usa comes second with a current account in deficit, and japan has its current account in surplus. comparing the three areas with respect to the public sector ’ s share in the economy, the usa has the lowest government expenditure, it has the lowest public debt and for the time being a budget in surplus. while the euro area has made some progress in reducing the government deficit and