However, exchange rate fluctuations among the currencies of EU countries – although not close to the size of the wide swings in the early 1990s – still implied, if unhedged, currency risks for any EU-wide allocation of investment portfolios. Moreover, financial investors had to face very diverse levels of monetary stability and fiscal soundness across EU countries.
The success of the nominal convergence process – which preceded the start of Monetary Union – and the governments’ commitment to honour the fiscal regulations associated with the monetary  BIS Review 13/2002  3  integration itself, reduced risks of EU-wide investments even before the creation of the ECB.