This, in turn, would dampen private investment and thereby weaken the foundations for sustained growth. Moreover, high levels of public deficit and debt would place an additional burden on monetary policy and undermine the credibility of the provisions of both the Treaty on European Union and the Stability and Growth Pact as a key pillar of Economic and Monetary Union.
Even now, the globalisation of the financial markets is calling for a widespread application of international standards. The euro is likely to encourage that trend. A reliable political regulatory framework and an efficient structure in the national financial markets will then become crucial assets in competing for capital that is in short supply. What implications do these developments have for the European financial markets?