CONSEQUENCES OF A MONETARY UNION FOR THE FINANCIAL-MARKETS

The article discusses the consequences of a European Monetary Union for the financial markets. The securities markets will become more integrated but there will still be interest rate differentials between otherwise identical securities issued by issuers in two member states due to information barriers and national differences with regard to the business cycle. The tendency towards securitisation will be strengthened. Securities markets will become more concentrated. Changes in the risk structure of the various economies will have consequences for the use of financial instruments. The markets for bank deposits and bank loans will be largely unaffected.