It is the elimination of exchange rate risk that is driving this process of market integration, the major feature of which has been a far-reaching convergence of long-term interest rates. This process started well before the launch of the euro, when markets gradually began to anticipate that EMU would become a reality.
An effective safeguard mechanism must identify all possible sources of such risks and put in place appropriate measures. Transparency is a critical requirement of a globally integrating financial system.