The Euro Area Corporate Bond Market - Research Paper Example

In order to understand the performance of the euro through the years, it is necessary to refer primarily to the historical development of the above currency since its introduction, in 1999. In accordance with Cummins (2002, 6) ‘from January 1, 1999 – the introduction of euro - until February 2002, employers have been busy introducing the new currency into their administrative, financial, and human resources systems. The above study refers to the initial response of the market to the introduction of the euro.

It does not explain however whether the entrance of the euro resolved the issue that was called to address. From another point of view, Galati et al. (2008) noticed that ‘the liquidity and breadth of euro financial markets are fast approaching those of dollar markets, and as a result, the euro is eroding some of the advantages that have historically supported the pre-eminence of the US dollar as a reserve currency (Galati et al., 2008, 1). In other words, the performance of the euro since its introduction in the European Union seems to be extremely positive leading the governments around the world to the thought of changing the currency of their reserves – an initiative that would eliminate the influence of the US currency on crucial industrial activities, like the trade of oil and its derivatives and so on.

The response of the markets to the introduction of the euro – as described above – seems to be differentiated (see Werder, 2002) from the responses of the consumers – that still remain sceptic towards the introduction and the expansion of the euro across the Union. As noticed above, the current study focuses on the examination of the various issues related to the introduction and the use of the euro not only in the European Union but also within the international community. The time period under examination has been set to 10 years, i.e. from 1999 up to 2009.