This paper reviews the factors that will determine the shape of financial markets under EMU. It argues that financial markets will not be unified by the introduction of the euro. National central banks have a vested interest in preserving local idiosyncracies (e.g. the Wechsels in Germany) and...

This paper shows that countries with weak banking system and fiscal institutions, should benefit from the presence of foreign banks, which can constitute a commitment and transparency device. Foreign banks can also reduce the probability of self-fulfilling speculative attacks. A strong presence...

With the successful launch of the euro, the previously national interbank bank markets have been integrated at once in a unified euro interbank market, outstanding public debt has been redenominated in euro, trading conventions harmonised, and all EMU stock markets have started quoting in euro....