The liberalization of trade is a historical phenomenon, which goes back a long way. Never before has any regional grouping made up of sovereign countries succeeded in taking economic integration as far as the European Union has done. Customs duties between European countries started to come down steadily in the early 1950s and disappeared entirely in 1968 with the introduction of a customs union and the implementation of the common external tariff. The official proclamation of the single market on 1 January 1993 marked the ending of non-tariff barriers to trade between Member States. European Monetary Union will make it possible to complete European economic integration. The disappearance of the national currencies will mean that the prices of goods can be directly compared on the markets of the participating Member States, which will merge into one. The transaction costs and the exchange risk, which are obstacles to trade will be eliminated. The competitive positions of companies can no longer be established by exchange-rate movements but will reflect productivity, inflation and cost differentials. This should permit a better allocation of capital and of available resources. Over and above its positive effects on price stability and public finances, the single currency will make it possible to complete the single market and increase the benefits, which have already flowed from it. Monetary Union will create an area within which national financial markets will become an integrated, wider and more flexible market. Financial institutions and financial centers will face new competitive conditions. The size of a specific national market will lose its significance. Competition will increase and could lead to greater harmonization across the euro area. The introduction of the euro will have a great impact on the financial sector. This is because of three main reasons: The European System of Central Banks will be operating the single monetar...
