spreads. however, total turnover is less than that for the predecessor currencies taken together ; indeed one would be disturbed if that were not the case, since the rationale for cross trades and arbitrage between the former currencies has evaporated. that is why in most financial centres - and hong kong is no exception - dealing rooms have been slimmed down. this is the dividend in respect of resource saving which represents one of the net benefits of moving to a single currency, even though the forex traders whose skills are no longer in such demand may not see it that way. in the bond market we have witnessed the first hong kong corporate issue in euro, which generated good demand - primarily from european investors but also with significant interest from local buyers. in former times an issue of this sort in any of the parent currencies would probably have been rarer, because the individual markets lacked maturity. a significant consequence of the euro ’ s arrival is that there now exists a market with the potential for a critical mass of liquidity well beyond that which the individual parent currency markets ever managed to achieve. there is further evidence to support that view in provisional reports that global international bond issuance in euro this year has exceeded that of issuance in the parent currencies during the equivalent period last year, while the same comparison for non - euro european currencies shows a decline ( although i have not yet seen the formal statistics by which to confirm this ). this has been achieved despite the fact that the process of establishing the euro firmly in these markets is not yet complete. investors are still feeling their way : for example, deciding on a benchmark yield for the euro, when there is a significant spread of perceived credit risk even between member state governments, is one area where fund managers may still be finding their feet. although i am not close to it myself, it is my impression that the industrial and commercial sectors have also adapted well to the euro, although the amount of adaptation that has been required differs across individual cases. many may not be affected, but equally many may be experiencing a drift towards more quoting and invoicing in euro ; in some cases there will be pressure to do so which, on competitive grounds, they can ill afford to ignore. and there will be some who find themselves at a slight competitive disadvantage if they are bidding for business in a euroland country against a competitor from another euroland country ; previously both bidders had to take account of exchange

mr latter comments on the euro : first impressions from hong kong address by mr tony latter, a deputy chief executive of the hong kong monetary authority, at the seminar entitled, “ five months of the euro : what does it mean for business in hong kong? ” held in hong kong on 11 may 1999. introduction it ’ s probably true to say that the arrival of the euro passed without incident and almost without notice in hong kong. you might think this a somewhat ungracious statement with which to begin. but it certainly does not mean that the euro is unimportant to hong kong. what the statement tells us, first and foremost, is that the preparations for the euro by those sections of the community for which its arrival was of immediate importance - and here i refer principally to the financial sector and parts of the commercial sector - were totally successful in ensuring a smooth and hence unremarkable transition. i would like to congratulate all concerned on that achievement. at the other extreme, my opening remark could also be taken as confirmation that the arrival of the euro was of no direct importance to the man in the street, who may never even have seen a european currency ; even if he has, he will not have to confront the euro in physical form until the banknotes appear in 2002. i should like to spend a few minutes discussing two aspects of the euro. one is its impact on and implications for the conduct of financial and commercial business here, essentially at the micro level. the other relates to some macroeconomic policy aspects of the euro ’ s birth, which are also relevant to hong kong despite our being some 10, 000 kilometres distant. consequences for financial markets and trade as one would have expected, the wholesale financial markets switched quite rapidly to quoting and dealing mostly in euros instead of the constituent currencies, and many businesses also chose quickly to redenominate their relevant accounts, although a significant number have not yet done so. the choice is largely one of practicality and economy, rather than of economic significance, given that, formally, the parent currencies are now no more than subdenominations of the euro ; one might therefore expect people to opt quite quickly for the convenience of a unified denomination rather than to continue operating with up to eleven separate ones. so far as i have been able to ascertain, the euro is trading in foreign exchange markets just as one would expect a major international currency to trade - that is, with good liquidity and fine