The Euro and Capital Markets: A New Era

• Published in: World economy Vol. 24; no. 10; pp. 1295 - 1308
• Main Authors: Perée, Eric, Steinherr, Alfred
• Format: Journal Article
• Language: English
• Published: Oxford, UK and Boston, USA Blackwell Publishers Ltd 01-11-2001; Blackwell Publishing Ltd
• Subjects: Bond markets; Capital market; Capital markets; Currencies; Economic and Monetary Union; Economic integration; Economics; Euro; Europe; European integration; European Monetary Union; Studies; Europe
• ISSN: 0378-5920; 1467-9701
• DOI: 10.1111/1467-9701.00412

The development of the euro capital market since the introduction of the euro is reviewed. It emerged that the new currency has had profound effects on the European financial scene. Confronted with increased competition, European borrowers have had to meet the requirements of investors that are no longer captive in their national currencies. All borrowers have taken steps to improve the attractiveness of their securities and provide investors with enhanced liquidity. The euro bond market has developed strongly and is getting closer to the structure of the US dollar market. The EMU was worth the effort and political risk on the basis of the gains from a more performing capital market alone. Public discussion has virtually neglected this aspect and has focused on the other sources of gain. The European capital market would benefit from a European regulatory and supervisory framework.