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| Tekijä: | Hau, H. Killeen, W. Moore, M. |
| Otsikko: | How has the euro changed the foreign exchange market? |
| Lehti: | Economic Policy
2002 : APR, 34, p. 149-192 |
| Asiasana: | EURO EXCHANGE RATES FINANCE |
| Kieli: | eng |
| Tiivistelmä: | This paper examines the primary forex statistics for the euro in relation to the German mark prior to 1999. Contrary to widespread expectations, the authors' evidence indicates that the euro lost ground against the US dollar in forex spot trading and in some dimensions does not even match the international transaction role of the German mark. The authors argue that the euro changed the forex market structure and particularly increased market transparency through currency elimination. The higher market transparency exposes the dealers to higher inventory risk as his inventory imbalances are revealed more easily to other dealers. Dealers in the euro markets recover increased inventory costs through higher spreads that make the euro a less attractive transaction medium than the German mark. |
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