Emu: Jeux sans frontières

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Emu: Jeux sans frontières

If the EU's single currency begins on schedule in 1999, further breaking down national boundaries, France's capital markets will be a major contender for a central role, squaring up to Germany in the fight for benchmark status. And what if Emu is postponed? Katrin Fhima reports.

The gloves are coming off in what is proving quite a fight for the 1999 heavyweight title of "Benchmark for Euro". That, though, is just one concern for France ­ though probably the main one. The French capital market is also exercised by Emu's effects on its fundamental structure and product innovation strategy.

As far as the benchmark title fight is concerned, France and Germany, the other main contender, have been sizing each other up for almost a decade. It's only in the past few months, though, that their respective capital markets have begun to understand what will be involved in coming out on top once Emu arrives. Essentially, strengths will have to be played up and attempts made to eliminate weaknesses.

Those in the French corner are quick to point out that their market's yield curve is the world's most liquid. Their opponents are as categorical. As one German banker puts it: "Germany has the strongest currency, the strongest market and the strongest government. People don't talk about the spread to the franc, they talk about the spread to the Deutschmark." That said, there are several reasons why France won't go down without a fight.

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