Title: The role of financial markets for economic growth
Headings: The role of financial markets for economic growth
The role of financial markets for economic growth
Speech delivered by Dr. Willem F. Duisenberg, President of the European Central Bank, at the Economics Conference "The Single Financial Market: Two Years into EMU" organised by the Oesterreichische Nationalbank in Vienna on 31 May 2001
Introduction
Does the financial system matter for economic growth?
The financial system of the euro area after two years with the euro
What is the role of monetary policy and central banks?
Conclusions
European Central Bank
Directorate General Communications

Content: Thus in order for banks to survive in a market economy they need to provide added benefits. It is difficult to compete with the debt securities market, if a bank loan is of a size where the fixed costs of accessing debt markets become negligible. However, securities markets are not always sufficiently liquid and some, especially small and medium, enterprises cannot cover their liquidity needs via securities markets owing to significant fixed costs of access. An additional benefit of bank-based finance relates to the intrinsic nature of the banking business: some projects cannot be financed directly by the market on account of significant information asymmetries between the borrowers and potential lenders. Banks can bridge this gap thanks to their comparative advantages in the assessment and monitoring of investment projects, which contributes to overcoming information asymmetries. The financial system of the euro area after two years with the euro
Let me now turn to the major changes of the financial system in the euro area after two years with the euro. Financial market integration
The launch of the euro on 1 January 1999 was a historic event. Eleven national currencies were converted into one single currency overnight. Greece became the twelfth EU Member State to adopt the single currency on 1 January 2001.