In order to derive maximum benefit from the introduction of the euro, it is desirable to attain a degree of harmonization of future euro markets by defining common characteristics that will apply to the financial markets of all the countries in the euro area.

Bond markets

Under the reference scenario adopted in Madrid, all new gradable public debt will be issued in euros as from 1 January 1999. In addition to this requirement, most issuers are now considering re denominating into euros their outstanding debt: this operation will have the advantage of generating euro liquidity in government bond markets and of enhancing the credibility of the governments’ commitment to the economic and monetary union (EMU) process.

Equity markets

As regards the changeover to the euro, the main European stock exchanges have announced their intention to pursue a Big Bang approach: as from 4 January 1999 exchanges will trade and quote all securities in euros. Intermediaries will have to make the necessary conversion in order to account to their clients in the currency chosen by the latter.

Derivatives markets

The transitional issues relevant to the derivatives markets mirror those of the underlying markets to which they relate. Accordingly, the same types of solution are recommended.