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'Euro a success in world finance'

LONDON: Europe's single currency the euro has established itself as a currency for international finance in its first year of existence, Governor of the Bank of England Eddie George said in a speech to the Euromoney International Bond Congress on Wednesday.

Commenting on the successful introduction of the euro in the bond market, George said that "not only did the volume of the issuance rise, but perhaps even more strikingly, the diversity of issuers increased too."

George said the creation of the euro has opened up new funding sources for a wider range of issuers, a trend set to continue.

Many commentators have labelled the euro a "failure" because it has fallen against other major currencies over the past year. But, it has been a clear success in the bond markets and many forecasters believe the currency could gain in value this year as the European economy recovers.

George also forecast there will be a fall in the absolute size of government bond markets, although Japan will remain the exception.

George said the outlook for bond markets have brightened over the past year as the clouds of financial instability and global economic slowdown dispersed.

George said the rate of world output growth, which had fallen to only about two per cent in 1998, is now expected to bounce back to around trend and the next couple of years.-Reuters