In such a world, we would still be close trading partners and our financial centres would retain their close ties – our supervisors would work together to ensure high regulatory standards, without imposing undue burdens on firms. Let’s not be unrealistic: achieving such cooperation is highly challenging.
Investment will also benefit as euro area companies no longer have to insure against exchange rate movements within the euro area and there are indeed indications that direct investment into the euro area has strongly increased since the start of EMU. Overall, the euro will give new impetus to the initiatives taken in the 1980s to establish a truly integrated internal market.