strong economic growth and low inflation. the integration of the financial markets the integration of the european financial markets was one of the advantages expected from the introduction of the single currency. what can be said today? as far as money markets are concerned, a very strong convergence of short - term interest rates could be observed by the end of 1998. after the introduction of the euro, the implementation of the operational framework for the single monetary policy and the new target system have accelerated the creation of a liquid and integrated money market for the whole of the euro area. the speed at which the eleven national money markets have integrated into one single large market is remarkable. the target system has allowed for a swift and efficient transfer of funds within the monetary union, thus reducing interest rate differentials between countries. the elimination of short - term interest rate differences was in turn necessary to enable the eurosystem to conduct its monetary policy in an efficient manner in the entire euro area. the success of target cannot be denied, not only from a technical point of view, but also from a commercial one as it has for the moment captured about 70 % of the total volume of large value cross - border payments in the euro area. although it started earlier, the process of integrating bond markets will take longer. the impact of the single monetary policy is indeed slighter on these markets and national characteristics - in particular different tax regimes - still remain important. however, the disappearance of the exchange risk, the harmonisation of market practices, the redenomination of government debt into euro at the beginning of the third stage of emu and important issues of government bonds in euro have contributed greatly to accelerate the process. yet this has not led to the disappearance of interest rate spreads between countries. the european bond market is, as you know, largely dominated by the national treasury departments which still place the major part of their issues on their domestic markets. while one has witnessed a decreasing spread between interest rates as a result both of the commitments made within the stability and growth pact and of the disappearance of the exchange risk, differences due to the size, liquidity and to the specific risk of each sovereign issue, however, still remain. though the european market of government bonds still suffers from a certain segmentation, the corporate bond market has already at present exceeded all expectations. during the first six months of this year, european companies are said to have issued more than double the amount registered in 1998. moreover, the average size of these issues has increased considerably. this

mr quaden addresses the impact of the single currency on the financial markets and looks at the international role of the euro speech by mr guy quaden, governor of the national bank of belgium and a member of the governing council of the european central bank, at a conference by the belgian banker ’ s association ( abb ) in brussels on 14 october 1999. * * * i would like to leaf with you through the photo album of a baby, whose name is euro. he is now nine months old and he took years, not months, to conceive. introduction on 1 january 1999, the final phase of economic and monetary union ( emu ) started with the successful launch of the euro. this followed a period of both intensive technical preparation and considerable progress in the economies of the participating countries. the changeover of all operations on 4 january went without upset and the major technical and logistical challenge which the preparation and success of the conversion weekend represented, has been fully met. since the beginning of this year the eurosystem, made up of the european central bank ( ecb ) and the 11 participating central banks, is responsible for the conduct of a single monetary policy for the whole of the euro area. assessing the first nine months of emu means first to focus on how the new system has been put in place and how it has been able to conduct the new single monetary policy efficiently. monetary union also marks a significant milestone in the process of european integration, whose first beneficiaries are the financial markets. their integration must indeed complement the integration of the goods, services and capital markets. i will successively address the impact of the single currency on the money markets, the bond markets and the equity markets. to conclude i will turn to the international role of the euro. does the euro succeed a few months after its birth in becoming a genuine international currency? the single monetary policy on the macroeconomic level, the birth of the euro has not only meant the coming of a new international currency, but also the emergence of a new supranational body, which has as its task to implement the new single monetary policy in an independent way and with the participation of the national central banks. after a conversion weekend, during which the whole of the interbank payment systems and the various financial markets changed over to the euro in four days, the governing council of the ecb ( formed by the six members of the executive board and the eleven governors of the national central banks ) was able from its