showing considerable interest in these area - wide indices, in particular as they are also now adopting investment positions on area - wide industrial sectors, using the sub - indices made available for that purpose. an indication of the degree of interest raised by area - wide indices is the relatively fierce competition for benchmark status that has developed between the various proponents of area - wide indices. second, market developments in relation to stock index futures and options will reflect the rise of area - wide indices. this may in turn lead to either consolidation or product specialisation of equity derivative exchanges. for my part, i consider the development of fair competition between exchanges to be a positive factor in terms of the improvement of the range of products and services available to the financial industry. third, in the equity market the euro has also provided a powerful incentive for the creation of new – and possibly competing – alliances among exchanges. before the launch of the single currency, circuits had been created for the launch of integrated “ new markets ” within and beyond the euro area, encompassing the shares of small and medium - sized companies with a high potential for growth. the development in the integration of exchanges has also continued more recently, and, as you know, it has not been limited to the euro area. 5. banking in the field of banking, the securitisation trend appears to demand strategic and organisational adjustment on the part of banks. the relative importance of the more traditional types of banking activity can be seen to be decreasing, even though it should be mentioned that traditional banking activities have nonetheless continued to grow at a rate exceeding that of growth of nominal gdp. in the euro area, growth in recent years has been much more rapid in assets under the management of mutual funds and other institutional investors than in the assets of banks. this reflects a tendency towards decreasing the relative weight of bank deposits compared with securities in financial wealth. the euro area banking industry has reacted to this development already by diversifying into the asset management area. banking groups have been able to “ internalise ” a significant part of the securitisation tendency as they control a large majority of the mutual funds. as a result of the securitisation trend, there has been an increase in the share of security holdings among bank assets, and an increase in the share of capital gains – although those are quite cyclically sensitive – as well as in fee income stemming from asset management services. meanwhile, the relative importance of interest income has declined correspondingly. at the bank level,

transaction volumes and measures of bid - ask spreads on the various money market instruments both indicate that the markets reached a very high level of liquidity very rapidly in the course of january 1999 and have subsequently retained it. the high degree of integration of the euro area money markets is, first of all, a result of the single monetary policy, which is conducted through the harmonised operational framework of the eurosystem. this integration has also been made possible by the significant and increasing integration of payment systems. cross - border payments processed by target accounted for more than 37 % of the value of all real - time payments ( domestic and cross - border ) effected by credit institutions in march and april 1999. moreover, the continuously high use which our counterparties make of the correspondent central banking model ( or ccbm ) for the cross - border transfer of collateral in monetary policy operations is an important indication of area - wide integration. this is evidenced by the fact that cross - border collateral currently represents around 25 % of the total amount of collateral in custody in the context of the eurosystem ’ s monetary policy operations. taking a closer look at the various instruments traded in the money markets, a feature that is worthy of note is that market participants in the 11 countries of the euro area have shown an increasing tendency to demonstrate a similar reliance on each instrument type. for example, what we call “ overnight indexed swaps ”, which are swaps indexed on the overnight reference interest rate eonia, have become an important derivative instrument in the money markets of the euro area. this can be seen from the low level of quoted bid - ask spreads and the high turnover relative to other major international markets. both indicators show a high level of liquidity in this instrument. another type of instrument of interest in the money market ( but also at the fringe of the bond market ) is that of the repurchase agreement. the development of more integrated repo markets in the euro area will obviously accompany the development of area - wide securities trading, settlement and custody systems. this will reduce transaction costs and improve efficiency for the cross - border transfer of securities through repurchase operations. looking ahead, other developments in the money markets are expected in the coming months. there are aims to establish new area - wide standards for the repo markets, with a view to overcoming the separation between different models in the national markets. these new standards could obviously coexist with other standards and broader conventions for international transactions. in fact, over the