The introduction of the euro has been a strong catalyst for mergers and acquisitions in the euro area. The European M & A market seems to be amongst the most dynamic in the world: with operations totalling over 1,000 billion euros in 1999, it is now catching up on the American market. The euro has brought about significant changes for participants in financial markets and has fostered structural developments in the financial industry. This is true both on euro-area money markets and on capital markets. From the beginning of Stage Three of EMU, cross-border transactions in the money market increased so as to represent more than 50% of the total activity in all segments of the money market. The unsecured deposit interbank market—which is mostly concentrated on shorter maturities—exhibits a  4  BIS Review 11/2001  very high degree of integration. The integration of interest-rate markets within the euro area is a key achievement which deserves to be underscored. EONIA and EURIBOR have provided the market with uniform benchmarks fully accepted by all market participants. The diagnosis is the same in the shortterm derivatives market, whose integration, standardisation and depth have increased. This is reflected, for instance, in the scale of daily transactions and the huge expansion of the euro interestrate swap market. These structural changes in the euro area money market have generated significant moves by market participants, who have concentrated their euro cash management activity and have benefited from better liquidity on the secondary market.
It is a keystone of the European single market, which will ensure prosperity in Europe for the benefit of the rest of the world. I would like to draw your attention to why the euro and Monetary Union have been successful from the outset, and to the conditions and prospects for building on this success. I. The euro and Monetary union are based on a credible monetary policy and contribute to an appropriate economic and monetary equilibrium in Europe I.1. A credible, stability-oriented monetary policy a/ First of all, let me point out that, from a technical and operational point of view, the launch of the euro on financial markets has been an indisputable success. In this respect, one has to remember all the doubts voiced three years ago. The decentralised organisation of the Eurosystem has achieved the objectives it was assigned in three important respects: •  operational efficiency, as is demonstrated by the timely adjustment of banking liquidity and steering of short-term interest rates;  •  the security provided by the procedures and systems implemented by the Eurosystem, both for the execution of its operations and in the field of large-value payments. At the shortest end of the market, the integration of the interbank market took place in 1999, right from the start of Monetary Union, thanks to the setting up of the Target system for the transfer of large-value payments in real time throughout the euro area and other EU countries.