The Euro as an International Currency: explaining puzzling first evidence from the foreign exchange markets

This paper presents evidence that the bid-ask spreads in euro rates increased relative to the corresponding bid-ask spreads in the German mark (DM) prior to the creation of the currency union. This comes with a decrease in transaction volume in the euro rates relative to the previous DM rates. The starkest example is the DM(euro)/yen rate in which the spread has risen by almost two-thirds while the volume decreased by more than one third. This outcome is surprising because the common currency concentrated market liquidity in fewer external euro rates and higher volume tends to be associated with lower spreads. We propose a microstructure explanation based on a change in the information environment of the FX market. The elimination of many cross currency pairs increased the market transparency for order flow imbalances in the dealership market. It is argued that higher market transparency adversely affects the inventory risk sharing efficiency of the dealership market and induces the observed euro spread increase and transaction volume shortfall.

No War, No Peace: Northern Ireland after the Agreement

In 1998 a historic agreement, commonly known as the Belfast or Good Friday Agreement, formed the basis of a negotiated settlement for the future of Northern Ireland. Since that time the level of violence in Northern Ireland has reduced but many problematic issues related to governance, sectarianism, and community relations remain on the political agenda and have destabilized the post-peace accord environment. Many of these issues can be viewed as either causes or consequences of the protracted conflict in Northern Ireland. This special issue examines some of these issues from a political psychology perspective. Economic, political, social, and psychological factors that have supported and hindered progress towards peace and stability are considered. While the paramilitary ceasefires have remained intact and certain aspects of life in Northern Ireland have been transformed, the road to peace has been hindered by both political and psychological intransigence. This paper offers an opportunity to reevaluate conceptualisations of conflict and its management in chronic situations, where divisions are deeply embedded within societal structures and relationships, and consider factors that may act as barriers to the development of a lasting peace.