VIENNA (AFX) - Bank of England governor Eddie George warned that the euro is just one key factor affecting euro zone financial systems.
Speaking at the Oesterreichische Nationalbank economics conference here, he warned against overestimating the impact of the single currency on the improvement of financial systems in the euro zone. George agreed with those who argue that the euro, by eliminating the exchange risk within the participating countries, can make a significant contribution to increasing the depth and liquidity of financial markets and reducing transaction costs, as it already had in money and bond markets.
He said the euro has also helped encourage the tendency to consolidation as financial institutions prepared for greater competition from other euro-based insititutions in their national markets.
"So I do not at all underestimate the contribution that the euro has made, and is making, to improving the efficiency of the euro zone financial systems," George said.
"But the point I have tried to emphasis this morning is that it is just one important factor among a number of others affecting our financial systems, so that one should not perhaps expect that it would have had a dramatic overall impact -- certainly not in so short a period of time," he said.
George, who has a reputation as a euro-sceptic, added that "there are many other things beyond the introduction of the single currency that we can and should do, whether from inside or outside the euro zone to improve the functioning of our financial systems".
Within Europe generally, some of the regulatory obstacles to greater integration of securities should be addressed and markets should be encouraged to find more efficient solutions to trading, clearing and settlement systems, he said.