as three basis points in early 1999 and has since then decreased to just one basis point. just to give for comparison a figure from the time before monetary union, let me mention that in january 1998, i. e. one year before the start of monetary union, the cross - country standard deviation was still higher than 130 basis points. in fact, such integration is a sine qua non for monetary policy implementation, since only an integrated interbank market ensures an even distribution of central bank liquidity and a homogeneous level of short - term interest rates across the euro area. and this rapid integration has been mostly supported by the establishment of the related payment system infrastructure, i. e. our target system, which has been operational since the first day of monetary union. the launch of the single shared platform, target2, planned for november 2007, will enhance financial integration even further, as it will provide a harmonised level of service and a single price structure for domestic and cross - border payments. the running of this large - value payment system is a very concrete example of how we provide central banking services that are conducive to fostering financial integration. our indicators for one - month and 12 - month maturities also consistently show a highly integrated unsecured money market, with the respective cross - country standard deviation of euribor lending rates among euro area countries standing, since early 1999, at values not higher than, and normally below, one basis point. finally, our indicators also confirm a relatively high degree of integration for the repo market. the eurepo index was launched in march 2002, and since then, the euro area cross - country standard deviation of the one - month eurepo rates has been around, and normally below, one basis point. the indicator for the 12 - month maturity shows a standard deviation of around, and normally below, two basis points. the decisive role of the euro in enhancing financial market integration is also visible in the interest rate derivatives markets. a particularly important segment is the euro interest rate swap market ( including, for example, the euro overnight index swap market ). this has, in fact, become the largest interest rate swap market in the world! [ 6 the least integrated money market segment is the short - term securities market. the european commercial paper and certificates of deposit markets are segmented in several market places. but i expect that the current fragmentation will be reduced in the future as a result of the short - term european paper ( step

economic and financial environment of the euro area has changed substantially during the last decades and is still changing further. we know that by moving from several currencies to a single currency many costs are reduced or in some cases even disappear. the euro has contributed to reducing trading costs both directly and indirectly by, for instance, removing exchange rate risks and the costs of currency hedging among the legacy currencies. information costs have been reduced as well. the euro also enhances price transparency and discourages price discrimination : this helps to reduce market segmentation, while also fostering competition. hence, the euro acts as a catalyst for the single market programme and provides a positive impetus to the euro area economy. many studies and analyses are now substantiating some of the important effects of the euro adoption. first and foremost, the euro area economies are becoming more interdependent, as evidenced by the significant increase in intra - euro area trade in goods witnessed since the launch of the euro. indeed, exports and imports of goods within the euro area increased from about 26 % of gdp in 1998, a year before the adoption of common currency, to around 31 % in 2005. this rise in cross - border trade may be associated, to a large extent, with the introduction of the single currency and the increased price and cost transparency that it helped to foster. see paul krugman ( 1998 ) ‘ ricardo ’ s difficult idea, www. web. mit / krugman / www / ricardo. htm. a less - known feature of deepening trade is that intra - euro area trade in services has also grown in recent years. intra - euro area exports and imports of services increased from about 5 % of gdp in 1998 to around 6. 5 % in 2005. trade in services should rise faster, accompanying the completion of the single market for services. this is particularly necessary in the financial area. we are perhaps already seeing the first signs of this process ; during 2004 - 2005 the growth of the euro area ’ s international trade in financial services ( intra euro area + extra euro area ) surpassed the growth in all other sectors of services, with intra - euro area trade in financial services growing almost as rapidly as extra - euro area services trade. the other dynamic sectors on the intra - trade side were computer and information services as well as communication services. the increasing interdependence of the euro area countries is also confirmed by the considerable growth in intra - euro area foreign direct investment (