constitutes one large market. of course, that market is still evolving and has not yet reached its ultimate state of development. for example, the euro as such currently exists only in the financial markets and, to some extent, in the business sector. consumers still calculate and pay in their own national currency unit, which is a handicap for increasing awareness of the euro. this will end with the cash changeover in 2002, which tends to be perceived by the general public as the true start of monetary union. in itself, the cash changeover is a gigantic logistic operation. moreover, there will be a period in which both the old national currency units and the euro will circulate simultaneously. the cash changeover will also achieve one of the main advantages of the single currency : transparency of prices in all markets. this will further facilitate the emergence of a truly single market, because it will be increasingly difficult to maintain price differentials for the same or similar products between countries. even though market segmentation may occur for various reasons, such as the particular tax situation or different technical specifications, pressure will increase on both entrepreneurs and regulators, as consumer and large retail organisations will become increasingly aware of the price differences. but there are more things to do to further integrate the euro area markets. there still exist structural rigidities in many countries, which affect the proper functioning of product and labour markets. a continuation both of moderate wage settlements and of structural reforms will be essential contributions to a further improvement of the functioning of european markets. the introduction of new technology requires flexibility of other factors, including labour, if production processes are to be reorganised most efficiently. if there are limits and restrictions to the adjustment to the most profitable combination of productive factors, the levels of investment in the new technologies will accordingly be affected negatively. it must be noted that the introduction of the euro has contributed to the awareness of policymakers throughout europe that structural reforms are needed. and although many reforms have yet to be implemented, substantial progress has nonetheless been made. governments have acted in the field of product markets in order to make them more competitive to the benefit of consumers. the favourable impact that opening up sectors to competition has on prices, growth and employment has become clear in the telecommunications and energy sectors. the challenge now is to further reduce the level of regulation so as to stimulate activities in other sectors of the economy. with regard to the fiscal position, there is a relatively high tax burden and there are still a number of countries with a very

the previous year. the full impact of the reductions in the crr effected last year will be seen in the current year. the crr on inter - bank liabilities has been withdrawn as part of the policy. apart from the impact this will have on the creation of an appropriate term deposit market, this will release about rs. 9500 million of lendable resources to banks. we have also introduced a general refinance facility which will be available to banks and this facility will be equivalent to one per cent of the demand and time liabilities of banks. all of these measures will have the impact of expanding the lendable resources of banks. the bank rate has been reduced from 12 per cent to 11 per cent to signal a reduction in the interest rate. we want the bank rate to emerge as an effective signal rate as well as a reference rate. to coincide with the reduction in bank rate, the term deposit rate for maturity of 30 days and upto one year has been reduced by one percentage point. the same rate has been made applicable to rates on term deposits of non - resident ( external ) rupee deposit accounts of maturity of over six months and upto one year. on foreign currency non resident accounts ( banks ) deposits, banks are free to determine interest rates subject to a ceiling prescribed by the rbi from time to time. thus the various measures announced will have the effect of expanding the lendable resources of banks on the one hand and bringing about on the other a reduction in the deposit rates and consequently lending rates. 12. responding to the policy announcement, a number of banks in the public sector banks have already reduced their plr by 50 - 100 basis points to take it to 14 per cent. needless to say the only enduring way to bring about a reduction in the interest rate is by keeping the inflation rate low and breaking inflationary expectations. 13. the third objective relates to the revamping of the credit delivery system which has become necessary for accelerating the credit flow from the banking system. a number of measures announced fall in this category. i would like to list the most important among them. the mandatory consortium requirements for credit limits of rs. 500 million and more has been dispensed with. banks and their customers can now enter into a variety of arrangements including syndication subject of course to the exposure limits. banks have been given full freedom to evolve their own methods of assessing the working capital requirements of borrowers. this should result in quicker decision making and speedier