News Release
Practical Issues Arising from the Euro
13 December 1999
The Bank of England is today publishing the twelfth edition of its practical guides to the euro . This is the second since the launch of the euro at the beginning of the year. Whereas the editions before the launch were designed to help those preparing to use the euro, the subsequent editions provide a London perspective on the rapidly developing euro financial markets and supporting infrastructure.
Practical Issues has, as in the past, been prepared by the Bank in conjunction with the major international banks and securities houses, of many nationalities, all of which have a significant presence in London.
Chapter 1 sets out the developments in the London financial markets since the launch of the euro. London has fully maintained its market share. The scale of euro business in and through London is important not just for the City but for the EU as a whole, given the contribution which the London markets are making, including to the international use of the euro.
Chapter 2 describes the way in which EMU has given an important boost to the European capital markets, and accentuated the trend towards securitisation and disintermediation of the banking sector. Corporate bond issuance in euro this year has been spectacular. And many euro-area equity portfolios are beginning to be diversified away from their previous heavy focus on local markets to other euro-area markets.
Chapter 3 describes the evolution of the supporting financial infrastructure, already taking place and in prospect. The extensive use of the European RTGS payment systems linked through TARGET is very welcome to all European central banks, because it makes for a safer financial market-place. Significant developments are in train in Europe to enhance the efficiency and cost-effectiveness of securities clearing and settlement systems. And the exchanges are responding to competition from electronic communications networks by expanding the range of markets they serve, enhancing the services they provide and, in many cases, changing their governance structure to help them adapt more easily.
Chapter 4 confirms that, beyond the financial markets, the euro is still little used in the UK, an experience also shared by the euro area itself.
Finally Chapter 5 explains the work under way in the City to prepare for possible future UK entry to EMU. The Bank of England is co-ordinating preparations through a new City Euro Group. Planning has now reached an advanced and detailed stage. The practical preparations for possible EMU entry in hand in Denmark, Greece and Sweden are also described.
