##tisation framework ), strengthening supervision and management of liquidity risk for banks, ensuring effective supervisory review under pillar ii, enhancing transparency and valuation, improving the quality of credit ratings for structured products, strengthening authorities ’ responsiveness to risk and enhancing robust arrangements for dealing with stress in the financial system. concluding remarks now, expeditious and effective implementation is of the essence. this should be considerably facilitated by the fact that the recommendations are made, at the global level, by those authorities and entities that have precisely to apply them. i recommend that this implementation exercise, that starts immediately, would respect as much as possible the following principles, which, by the way, are the underlying principles that have inspired the g7 recommendations of the financial stability forum. firstly, augment transparency. the present turbulences have, once more, demonstrated that opacity as regards markets, financial instruments and real situations of financial institutions is a recipe for catastrophe. as soon as financial markets are entering an episode of uncertainty and turbulence, absence of transparency triggers contagion and negative herd behaviour. this spread of contagion due to opacity was at the heart of the asian crisis. it is very much also at the heart of the present episode. this is true both for the financial instruments – sophisticated structured products, asset - backed securities, etc. – and for the financial institutions themselves. the absence of pertinent, credible and reliable information drives market participants to assume the worst possible hypothesis on those financial instruments or institutions at stake and to act accordingly. more transparency is not only necessary to make the markets more efficient and to optimise the allocation of capital, but it is also the best insurance policy against irrational herd behaviour and unjustified contagion in times of stress. secondly, reduce pro - cyclicality. in normal times the elements of pro - cyclicality built in global finance are less obvious. but in acute episodes of booms and busts, these factors are particularly visible. human nature is probably at the heart of the spontaneous pro - cyclical attitude of market participants triggering successive bipolar phases of exuberance and despair. but the paradox is that a number of rules, regulations, procedures and the behaviour of authorities very often contribute to augmenting the amplitude of the fluctuations. we find such elements of pro - cyclicality in the set of prudential rules for banks as well as for insurance companies. we find pro - cyclicality in the accounting rules. we find elements of pro -

denominations within the given market structure. its introduction may determine a “ shift of regime ” in financial markets, which would imply that market participants may fundamentally revise their strategies in response. although only a very preliminary assessment is possible at this stage, figures currently available on the international use of the euro as an investment and financing currency seem to confirm this impression. with regard to the field of international debt securities issuance, in 1999 the euro was more widely used than its legacy currencies had been before 1998. this fact has emerged from the data published by the bank for international settlements, which single out the truly international component of euro - denominated issues. according to this statistical source, in the first three quarters of 1999, euro - denominated gross international issues of money market instruments, bonds and notes accounted for 38 % cent of total issues, just slightly below the share of the us dollar ( 41 % ). by comparison, in the first nine months of 1998 the combined share of the former euro area national currencies and the ecu was only 24 % of total gross issuance. of course, one - off factors may partly explain the development of the euro : issuers may have deliberately postponed deals arranged in 1998 until after the “ changeover weekend ” and increased issuance activity in order to create liquid benchmarks. however, issues in euro have been growing continuously over the whole year, so other factors are also likely to have played a role. in my opinion, one of these factors may be market expectations concerning the future development of the domestic euro area financial markets. the introduction of the euro, in fact, involves a process of integration of national financial markets of the euro area into an area - wide single market, the size and liquidity of which will exceed that of the constituent markets. this implies a reduction in transaction costs and greater choice of financial instruments, which make the euro attractive as a vehicle for portfolio diversification. a virtuous circle may therefore develop - the increasing international use of the euro as an investment and financing currency may feed back into the depth and breadth of europe ’ s domestic financial markets, thus encouraging further restructuring of the euro area financial system. evidence shows that the euro area money market is already highly integrated and liquid. significantly higher trading volumes in this market have already led to lower bid - ask spreads for very short - term maturities. efforts to integrate national securities markets and settlement systems are under way. the euro is also increasing competition in the banking sector