or starting with ifis, which would improve the range of high - rated instruments in local currency. from the viewpoint of ifis achieving this objective would be helped by adopting standardised bond documentation and international accounting rules, by lowering transaction costs ( not least through interlinked clearing and settlement systems ) and by developing domestic derivatives markets. 2. promoting domestic derivatives markets developing domestic derivatives markets is a crucial measure to promote liquidity both directly and indirectly through helping to diversify the investor base. derivative markets provide cost - effective ways for institutional investors to structure their portfolios more efficiently and improve their risk management. despite their dynamic growth over recent years, the emes ’ derivatives markets account for no more than 10 % of the total outstanding notional values in global derivatives markets. furthermore, the development of derivatives markets differs remarkably across regions. the trading volumes of exchange - traded and over - the - counter contracts are largest for foreign exchange forwards and swaps and for equity options and futures. trading of these instruments is particularly important in emerging asia, while exchange - based trading of interest derivatives on the whole is lagging somewhat behind and is more important in latin america. to promote the development of derivatives markets, the emes should examine the extent to which regulatory deficits and shortcomings in the market infrastructure may be impeding the evolution of such markets. the g7 countries could assist this process by providing their expertise and supporting technical assistance in this area in close cooperation with the ifis. 3. strengthening the market infrastructure and the legal framework a strong legal and regulatory framework, international competitive clearing and settlement systems, effective credit ratings, and good corporate governance are also key ingredients for the development and efficient functioning of capital markets. despite the remarkable progress that emes have made so far, further reform steps are needed in these areas. let me address these aspects in more detail. first, clearing and settlement systems : capital movements are global but the clearing and settlement of securities is very often country - based. the current setup in many emes in terms of mitigating risks in the settlement process and cost effectiveness is often less than optimal. in addition, clearing and settlement systems are still highly fragmented. however, best practices in this area are well developed in the form of recommendations by the committee on payment and settlement systems ( cpss ), the international organisation of securities commission ( iosco ) and the g 30 action plan towards enhancing the interoperability of settlement systems. thus, the challenge does not lie in determining what goals

, initial experience with the new currency in the international financial markets can be evaluated. the changeover to stage three of emu, which posed an extraordinary technical and operational challenge to all financial market participants, was an unqualified success. despite the technically complex task at hand, there were no serious malfunctions. much to the relief of the financial market participants, the convergence of interest and exchange rates took place even before the euro was launched. the speculative attacks against the euro which many people were afraid would happen did not come to pass. the money market rates converged towards the low level of the core countries, which was set by means of the coordinated interest rate reduction by the central banks of the eurosystem in december 1998. all in all, the smooth transition from the national currencies to the euro can be regarded as a sign of the high quality of the preparations made by the central banks and the private financial market participants – and as public recognition of the hitherto successful convergence process of the partner countries. - iv confidence in the role and the work of the ecb is rising within the german population. the decision to locate the european central bank in frankfurt and the composition of the governing council with wim duisenberg as president stand for a tradition of stabilityoriented monetary policy. after all, the institutional regulatory system of the eurosystem was modelled on that of the bundesbank. the establishment of an independent european system of central banks unmistakably dedicated to the goal of price stability was of the utmost importance for german residents and politicians. like the bundesbank act, the maastricht treaty only envisages supporting the general economic policy of member states provided this does not prejudice the objective of price stability. the governing council of the ecb has thoroughly discussed its monetary policy approach and subsequently presented and explained the results in detail to the public. the ecb has made it plain that – in line with its mandate – it shall pursue neither an exchange - rate - oriented monetary policy nor an anticyclical monetary policy. exchange rates and the business cycle will certainly be carefully observed, analysed and taken into consideration in the decisionmaking process, but they do not determine the general orientation of the ecb ’ s monetary policy. rather, monetary stability as the primary goal of the ecb shall be ensured by regulating the growth of the money stock, with the aid of interest rate policy, in a way that, on the one hand, enables