mr. ercel considers the european financial markets and their implications for turkish institutions speech given by the governor of the central bank of the republic of turkey, mr. gazi ercel, in istanbul on 23 / 10 / 97. the emu will be the most important change in the international monetary system since the creation of the imf at bretton woods. the creation of a new currency, the euro, is in fact a historical event for the european union ( eu ). it marks a new quality in the process of european unification because it is the final point and coronation of efforts since 1958 to create one big market in europe. the success of the euro area will, of course, depend on the future development of the value of the euro. the euro, as we all know, has to compete with two strong international currencies : the us dollar and the japanese yen. according to one school of thought, the euro will have a stable value. that is because the high stock of assets in euro, held by official or private foreign holders and which were converted from national currencies, in particular from deutsche mark, will not be switched into other currencies. besides, once the euro is introduced, there could be a significant switch of foreign exchange reserves out of us dollars and into euro. this could give a boost to the exchange rate of the euro against the us dollar over time. the sheer size of the economy in the monetary union will encourage the use of the euro instead of the us dollar in trade and foreign exchange transactions. this process would further be accelerated by the fact that the use of a single currency will remove the not negligible cost of transactions. according to a study conducted by the ifo institute in munich, “ the transaction costs for the inter - european currency management may be in the order of nearly 60 billion ecus, or nearly 1 % the gnp of the european union ”. also it is likely that central banks will use the euro rather than the us dollar in foreign exchange interventions. in turn, this will encourage non - eu central banks to switch an increasing proportion of their reserves into the euro. this process will take time and the euro will not usurp the role of the us dollar in the short term. however, the trend is likely to be persistent and eventually the current importance of the us dollar in the foreign exchange markets should be replaced by the joint importance of the us dollar and the euro. one factor which will affect the speed of

to private financial institutions in the sequence of financial and economic reforms began in the 80 ’ s, and which witnessed great move as from 1990. in effect, of a total of three banks and one insurance company that the country had in 1987, currently the number has moved to a total of ( 12 ) twelve banks, 11 ( eleven ) credit cooperatives, 56 ( fifty - six ) micro - finance institutions, besides 4 ( four ) insurance and leasing companies and others, as well as a notable implementation of electronic systems of international standards. however, this development is characterized by a tendency towards the concentration of institutions and financial services in the main cities of the country, situation that became worse with the closing of some branches in the rural areas, creating within the authorities and in the society in general, a great concern, given that it is in these areas where the majority of our population is concentrated. in fact, the numbers show that the 228 ( two hundred and twenty - eight ) bank branches existing in the country only cover 28 ( twenty - eight ) districts, which means that the remainder 100 ( one hundred ) districts, which comprise about 79 % of the national territory, do not possess any banking representation, in other words, a vast group of people are deprived of financial services. the disproportions are still more evident if we consider that the three main cities of the country, maputo, beira and nampula, have altogether 132 ( one hundred and thirty - two ) branches, that is, 58 % of the total branches, of which maputo city, alone, absorbs about 45 %. in maputo city, for example, each branch serves 11, 592 inhabitants, while in milange and angoche, the coverage is of 411, 267 and 258, 594 inhabitants, respectively. analysing the prevailing situation in another perspective, it is concluded that in maputo city there is a branch in each 2. 85 square kilometres against 15, 871 square kilometres in montepuez and 14, 150 square kilometres in mueda, which shows the long way still to be pursued. with regard to other kinds of services and financial products, namely atm ’ s ( automated teller machines ) and pos ( point of sale ) devices, it is concluded that there are differences provided that they are also concentrated in maputo ( province and city ), as they represent 69 % of the total national coverage. in order to invert the situation, the authorities have devised