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.

Controls on stone temperatures and the benefits of interdisciplinary exchange

Data derived from a series of field and laboratory studies of the influence of albedo and thermal conductivity on stone temperatures are reported. They indicate the complexity of surface/subsurface temperature response characteristics of different stone types exposed to the same conditions and highlight the influence of albedo and thermal conductivity on micro-environmental conditions at the rock/air interface – conditions which have significant implications for the nature and rate of weathering activity and which may, over time, affect any surface treatments applied to stone surfaces. Although the studies reviewed were carried out within the subject area of geomorphology, the data reported and the implications for stone weathering arising from them, may be of some relevance to the conservation science perspective on deterioration of contemporary, historical and archaeological stonework.