This website uses cookies to ensure you have the best experience. Learn more

The Impact Of The Euro On Financial Markets And Their Participants

2818 words - 11 pages

This essay is intended to evaluate the impact of the European single currency since its inauguration on 1st January 1999. In part a) I will identify and explain the impact of the Euro since its introduction on the foreign exchange, bond, equity and Eurocurrency markets. Part b) will concentrate on the implications of change on differing groups of participants or potential participants in these markets.PART AThe Foreign Exchange MarketThe disappearance of 12 sovereign currencies and the increased mergers and acquisition between Euro zone banks instigated by the introduction of the Euro has led to a reduced volume in trade within the foreign exchange market (as the number of participants and the markets they trade across decreased).Foreign exchange average daily turnover has also declined, from 1998 figures of $1.4bn to 2001 figures of $1.2bn [Joshua Rosenberg - Federal Reserve Bank of New York (2002)] , although it is quite probable that other factors such as the economic downturn and mergers & acquisition (M&A) activity (which may compensate by increasing market liquidity) are in part responsible for such a decline in figures. Various studies have been undertaken regarding the influence of the Euro, with the overall conclusion being that the behaviour of the Euro, in terms of bid-ask spreads, volatility and trading activity correlates to that of the Deutsch mark.Statistics obtained from the Bank of International Settlements (BIS) showed that since the introduction of the Euro the dollar has slightly strengthened its position as the global vehicle currency (used when central banks wish to intervene in the market), being accountable in 91% of all foreign transactions. The Euro presence existed in 38% of trades (30% of which were trades against the dollar), slightly gaining on the total sovereign currency presence that used to exist.Since Jan 1st 1999 it has been seen that the value of the Euro has depreciated significantly against other major currencies such as sterling and dollar. This weakness could well have dissuaded governments (especially in Lower Developed Countries) to transfer some of their reserve holdings into Euros. Therefore it could be acknowledged that should the Euro recover its exchange rate position and eliminate the relative volatility, such countries could substantially rebalance their reserve portfolio.The Bond MarketsThe coming together of the 12 national bond markets into a singular entity (one European market in bonds denominated in Euros) has created a market with the ability to rival the US Treasury in terms of becoming a global benchmark. Whilst the overall size of the Euro-denominated bond market is still significantly smaller than its US counterpart at 6623bn, there is strong expectation that the increased breadth and depth of the market is likely to "double the size of the US Treasury market in five to ten years" [Mark Holder, Chicago Board of Trade]*Government BondsSince joining the EMU members have seen...

Find Another Essay On The impact of the Euro on financial markets and their participants

Images of nursing- how the images of nursing have changed over time. How these images impact on the position of nurses within society. Includes interviews with 5 participants

1418 words - 6 pages readings on the subject, seem to indicate that gender norms; particularly in relation to the nurse as a female entity, have had a significant impact on common images. Perpetuated by the media, these images both reflect and reinforce the social status of nursing through out history.I interviewed two female and three male students, all of whom were nineteen years of age. To maintain the private identity of the respondents the interviews were conducted

Discuss the primary purpose of financial markets in respect to financial instruments and institutions

554 words - 2 pages The Primary Purpose Of Financial Markets.Borrowers and lenders of funds use financial markets for buying necessary goods or for saving. Borrowers (or deficit units) require funds and this is provided by lenders (or surplus units).Generally deficit units will require large amounts of funding for buying goods such as cars or houses, however most surplus units will not have enough money to lend out to them standalone. Because of this, a financial

In between lectures, participants in the programme are required to go through a given amount of work on their own, i.e. self-study.

1341 words - 5 pages and also has a significant impact upon consistency. Additionally, in situation where the financial markets of assets declined sharply and the valuation inputs change overnight, it is impossible for the information to be consistent. However, fair value accounting seems able to overcome in a situation where comparability and consistency are more compromised than in the traditional accounting model. Nevertheless, since the major objective of any

The impact of the global financial crisis on Chinese economy

3304 words - 14 pages The impact of the global financial crisis on Chinese economy In the past two decades, China has enjoyed the one of the world’s fastest growing speeds. And for right now, China has been the most major contributor to the world economic growth. But in the recent years, the global financial crisis already did a huge damage to the Chinese growing economy. Especially in the aspect of exporting sector, China has been hit hardly by this crisis. The

The Impact Of Global Financial Crisis On The United Kingdom

2669 words - 11 pages world than the old world each individual is more likely to concentrate upon his war effort if he feels that his government will be ready with plans for that better world.’ in his December 1942 report (Alderman, 1986, p. 230). On 9 February 1948, Bevan urged ministers and doctors to ‘take pride in the fact that, despite our financial and economic anxieties, we are still able to do the most civilised thing in the world: put the welfare of the sick

The Impact Of Global Financial Crisis On The United Kingdom

7067 words - 28 pages The impact of the National Health Service on the United KingdomIntroductionThis report will look at the National Health Service, which is a significant part of the current welfare state in the United Kingdom. It is for people who would like to know more about health system of contemporary Britain. In this paper, it will begin by looking at the healthcare background and reforms, and will show how the NHS has affected British citizens. Finally

America and the Euro

4223 words - 17 pages to: Change the financial landscape – by eliminating the currency risk that has led banks and investors to keep most of their money at home. A pan-European small capitalization market will begin to emerge. Investors will have a greater choice of investments outside their borders without currency risk. The large Euro zone will integrate the national financial markets, leading to higher efficiency in the allocation of capital in Europe

The Impact on America of Turkish, Greek and Italian Immigrants and Their Respective Cultures

1591 words - 6 pages The Impact on America of Turkish, Greek and Italian Immigrants and Their Respective Cultures My Big Fat Greek Wedding, The Godfather, The Italian Job, Roberto Benigni, Mario Andretti, Frank Capra, spaghetti, gelato, Turkish baths.? What do all of these have in common?? All of them are well known parts of American culture, yet they have all been influenced and inspired by Italian, Greek, and Turkish immigrants and their respective

Theories of Teaching and Learning and their Impact on the Classroom Environment

1679 words - 7 pages Theories of Teaching and Learning and their Impact on the Classroom Environment   Although there are many theories of teaching and learning, this essay will be focusing primarily on professionalism, cognition and language, cognitive views of learning and behaviourism, and how they individually and collectively impact the classroom environment.   A professional teacher encompasses essential characteristics to teach at their highest level

The Flying Men and Their Impact on Literature. Speaks of Orville Wright and Wilbur Wright

1410 words - 6 pages Who knows when a human first dreamed of flying like a bird . It is important torecognize flying, its effect on people and their communication has changed because of flight. Ibelieve that the invention of airplanes just enhanced the way people communicate and how theyrelate. Literature as a form of communication, was one of the many things that was onlyimproved by the invention of the airplane, because of several reasons.Who invented the airplane

The Financial Impact of Technology on Service Delivery

1491 words - 6 pages restructuring financials, every hospital system will be looking for the best “bang for their buck”. Works Cited Chaudhry, B, Wang, J, Woo, S, Maglione, M, & Mojica, W. (2006). Systematic review: impact of health information technology on quality, efficiency, and costs of medical care. Annals of Internal Medicine, 144(1), Retrieved from http://www.annals.org/content/144/10/742.short Kaiser, F. (2007, March 1). How changes in medical technology

Similar Essays

Understanding Exchange Rates And Their Impact On Management Financial Decisions

3021 words - 12 pages global trade. We then need to discuss how these rates are determined and who sets the rate for each country. Then we will examine the impact of these rates, both good and bad. While examining the impact of exchange rate fluctuations we will complete cost comparisons of similar goods in the U.S. and in foreign markets and discuss the effect of rate changes on the international market. This will provide us with the opportunity to discuss some of the

The Euro And Its Impact On The U.S. Economy

1293 words - 5 pages transactions. To date the euro has not been a great contender to the dollar, primarily due to regulatory and legal differences in important financial markets like equity trading and securities lending. Therefore, if its financial system overcomes its difficulties, the euro's status may increase and prove it to be a strong opponent.However, it is very likely that the euro's impact on the world monetary system will occur gradually. In a 1998 Washington

The Effect Of High Frequency Trading Systems On Financial Markets

1394 words - 6 pages finds evidence to suggest that HFT causes stock prices to over react to news about fundamentals, and because this over reaction is subsequently corrected, he believes it delivers direct evidence to support HFT escalates volatility in financial markets. Academic support in favour of the practice is led by Professor Brogaard (2010) who finds no evidence to suggest that HFT has a detrimental impact on volatility. Brogaard created a natural experiment

The Effect Of Social Loafing On Participants In Collective And Coactive Conditions

2066 words - 9 pages from the brainstorming task-thus being a personal reward- the incentive may have an effect on how well the participants wish to answer (Kerr, 1983). Kerr’s concept examined how students’ number of answers is influenced by their surroundings and the effects of those surroundings. In critical analysis of Kerr’s concept, collective condition was found to be more active than though working alone. This supports the hypothesis that participants in the