What will be traded in an EMU environment? How much will be traded? And where will the new instruments be traded? Let me take these points in turn. What will be traded when the euro makes its debut? BIS Review 67/1997  -4-  Looking first at on-exchange markets, it seems likely that, in EMU, there will be room for only one three-month euro short-term interest rate futures contract, although the greater depth of the new euro market may allow other products at the short end of the yield curve, such as a one-month euro contract, to co-exist with the three-month benchmark product. In the bond markets, one - and perhaps the most likely outcome - is that a particular government’s bonds will become the benchmark for the new euro bond market. We may all speculate idly on which that country might be. These issues would then anchor the euro yield curve and futures contracts would follow naturally. The greater depth of the new euro bond market may well mean that it can support a greater range of futures contracts further along its yield curve, as is the case now in the US. Five and two-year contracts, which do already exist in the Bund market, may develop further. The exchanges themselves recognise this point and are seeking to fill in the yield curve in their various markets before the start of EMU. Other national bond markets will be keen to run alongside the main market and futures contracts on those markets may also exist.
2/2  BIS central bankers' speeches