"The Euro’s Impact on Money and Capital Markets"

At the start of the Third Stage of EMU, it was by no means clear whether the ECB would succeed in setting up an efficient framework for distributing liquidity throughout the euro-zone. Now in retrospect, however, the ECB appears to have been quite successful. In this paper, we will look at the major impact of the ECB's operational framework on the daily business of the euro area money market. We will also examine whether the ECB has in fact succeeded in creating a uniform monetary policy resulting in similar liquidity costs in all participating countries. And we will elaborate on the development of the various segments of the money market. In addition to trade volumes, we will focus on money market integration and the extent to which EMU has affected market efficiency compared with that of the predecessor markets. Finally, we will present a number of conclusions and identify factors that continue to hamper the optimal functioning of the market.