y policy in euro. So, it will be necessary for financial institutions to be able to operate in euro. Governments will issue all new debt in euro. Therefore, financial institutions, payment systems and clearing systems will have to be prepared to operate in euro from the start of monetary union.. Businesses and citizens may decide to use financial products denominated in euro at any time during the transition period. A financial institution that fails to provide such services would run the risk of losing business.The introduction of the euro is important not only for the Union and its Member States but also for their partners. It is evident that the euro will produce important changes on financial markets, but they will not be disruptive to the international economy. The international role of the euro will probably be felt first in the countries where economic and trade links with the European Union are strong. In the countries of Central and Eastern Europe, for instance, where there is a shift from the dollar to the Deutsche Mark and later on to the euro. Gradually its role will grow at world level, as markets realize that the euro is a stable currency. The size of EMU and the integration of its financial markets imply that the euro will become a major world currency. Countries, which are less developed will be likely to use the euro as an official reserve currency.The size of the euro area and its high competitiveness in the world will gradually switch the transactions to euro. European companies will have advantage in issuing invoices in euro, in the same way like the American companies are issuing invoices in dollars. They will no longer face the risk of currency shocks. This will increase the competitiveness of the European companies worldwide.The interest rates are important aspect in the financial system of the union. The European Monetary Union will decrease the interest rates, due to the following factors:The stability of the e...
