Converting the ECU 1:1 to the Euro :
20 Common Questions

Graham Bishop (*)


Introduction

The Madrid Summit, in mid-December of 1995, recommitted the European Union (EU) to the goal of a single currency, and EU leaders laid down the scenario for introducing it from 1 January 1999 (1). However, the ECU markets still languish: turnover is limited, redemptions outpace new issues and the currency itself trades at a 3% discount to the value of the basket. This apparent paradox should offer interesting investment opportuntites.

The paradox can be explained in part by investor doubts that agreement on a scenario is sufficient to make European Monetary Union (EMU) certain when slowing economic growth is holding up budget deficits. The convergence criteria as set down in the Treaty must be respected, and a number of EU Member States (most importantly France) have announced plans to meet the criteria. However, investors remain unconvinced that the measures will be sufficiently forceful to make EMU certain.

However, at Madrid the Heads of Government again demonstrated the political will to achieve monetary union by their complete agreement on the following: the date of monetary union; the name of the single currency; the timetable for the conversion process; and the measures proposed to create legal certainty in the changeover.

Legal certainty is of crucial importance to users of ECU-denominated contracts and the EU is now committed (Presidency Conclusion A, paragraph 6) to complete technical preparations, by the end of 1996, for a Regulation. This Regulation will:

- confirm that "the official ECU basket will cease to exist" after the start of the third stage, and

- provide that "In the case of contracts denominated by reference to the official ECU basket of the European Community, in accordance with the Treaty, substitution by the Euro will be at the rate of one to one, unless otherwise provided in the contract."

These statements make explicit the intention of the EU Heads of Government to create a monetary union in which obligations currently denominated in "ECU" will be completely redenominated 1:1 into the "Euro". These details are vital for the ECU capital markets. By definition, they will be the first to convert 1:1 into the new single-currency denominated markets. However, any revival of the ECU market is likely to require a number of elements, beyond making EMU appear certain:

- Investor recognition of the 1:1 proposal announced at Madrid. Perhaps because the proposal was buried deep in the text, its significance is not yet appreciated. Rapid progress on the technicalities might offset the initial absence of impact. In particular, early enactment of the Regulation -- for implementation on 1 January 1999 -- would boost confidence in the ECU bond market.

- Reinforcing the linkage between the value of the the currency basket and the market value of the ECU. The European Monetary Institute's (EMI) duties include "overseeing the development of the EC" so that it could encourage the private sector to take steps to stabilise the relationship. The onus is probably on banks to institute methods to improve the payment-clearing system (2). For example, they could allow short-term ECU interest rates to move sufficiently to attract investors to the ECU or perhaps find a way to permit the "basket of currencies" to be delivered occasionally in settlement of ECU obligations. As the largest participant, by far, in the ECU markets, the European Commission could undertake some of its transactions in actual baskets, rather than ECU.

- Increased issuance of ECU bonds once the market has stabilised. The ECU market risks becoming locked into a vicious circle of sizeable net bond redemptions that depress the ECU because the proceeds of ECU bond issuance are converted into other currencies (see Figure 4). The wider the discount, the greater the disincentive to issuers that may have to incur the extra cost of repaying at 1:1 -- if they convert the proceeds to other currencies initially. Announcements by major issuers of appropriate plans could be a powerful stimulus to the market. These plans could include statements about early purchase of ECU currency to fund redemptions and, paradoxically, a suspension of issuance until the ECU returns to fair value. Incorporating ECU issuance plans in the programme of converting debts to Euro would underline the commitment to a sizeable and well-functioning ECU bond market.

The problems of the ECU market may create an air of doubt amongst investors about the ability of the EU authorities to organise such a massive undertaking as EMU if its widely perceived forerunner -- the ECU market -- falls into disarray. This risk gives the authorities a strong incentive to orchestrate a solution. If these building blocks begin to fall into place, investors should be alert to the possibility of a sharp revival in ECU bonds.


BACKGROUND

Figure 1. Key Events in the ECU's History, 1981-99
ECU versus Basket - Key Dates
1981 ECU Basket Born
1987 Breaking of Basket/ECU Link
1990-Jun 92   ECU Bond-Issuing Boom
Dec 91 Treaty of Maastricht Signed
Jun 92 Danish "No" in Referendum
Sep 92 ERM Crisis: Lira and Sterling Leave
Aug 93 ERM Crisis: Bands Widened to 15%
Oct 93 Introduc.of Caps on Clearing Banks Exposure
1995 ECU Bond Market in "Run-Off"
Mar 95 ERM Crisis: Peseta and Escudo Devalued
31 Dec 98 ECU Basket Ceases to Exist
1 Jan 99 Euro Scheduled to Begin:
Initial External Value Equals That of Basket

Figure 2. The ECU -- Market Value versus Basket and Key Events, 1985-Feb 96

Not available on the server, please see the printed publication

The ECU-denominated financial markets now have a finite life span. Figures 1 and 2 set out the key events of the past and the significant final dates. The salient feature over this period is the build-up of independence of the private ECU from the basket of currencies that was thought to define it. This volatility has proved to be a major impediment to the development of the market.

Prior to the Madrid Summit, considerable uncertainty existed amongst ECU market participants about the future valuation of ECU assets. Many investors have started looking at the ECU market again and have posed numerous questions. The Madrid Presidency Conclusions answered some of these questions, but others require analysis of several source documents.


TWENTY COMMON QUESTIONS ABOUT THE ECU

1. What is a Basket?

It is a "basket" of amounts of the 12 EU members' currencies and is specified at present in an EU Council Regulation of December 1994 (Appendix 1). The Treaty of Maastricht stated that the number, and quantity, of the currencies would not be changed once the Treaty came into force (Article 109g -- Appendix II). From 1981 to 1987, the Ecu Banking Association -- a group of major private banks that clear ECU payments -- permitted ECU obligations to be settled by the delivery of the basket of currencies. Because this process was cumbersome and expensive, it was abolished -- thereby converting the ECU into a separate, floating currency.

2. Where can I follow the ECU/basket price?

The ECU/basket price can be followed on Reuters pages KBXE -- Kredietbank and PBXC -- Paribas (Belgium). The price is quoted as say 102 ECU per basket; thus, in this case, the ECU is at a discount to the basket.

3. Why does the ECU currency trade at a different value to the basket?

Once it became clear that the ECU really could float independently of the basket, the perception of risk-free arbitrage between them disappeared, and even foreign exchange trading between them fell sharply. In the past year or so when investors were doubtful that EMU would occur, selling pressure on the ECU -- for example, from sales of bond redemption proceeds -- was not matched by any demand. This process became a vicious circle of investor doubts about the eventual value of the ECU leading to a lack of demand for new bonds at a time of heavy redemptions that followed inexorably from the earlier issuance boom of generally short-dated bonds.

Figure 3. Rise and Fall of the ECU Bond Market (ECU in Billions) and the ECU Currency (Basket=100), 1988-96

Not available on the server, please see the printed publication

4. Why has the ECU's volatility versus the basket risen as the deadline for EMU has come closer?

A substantial number of banks used to make a market between the ECU and the basket, expecting that divergences would be limited and that the ECU would revert relatively quickly to par with the basket. As these expectations were undermined, the number of "basket-makers" and the level of liquidity have dwindled. Moreover, two significant structural changes have occurred recently: the ECU market has contracted significantly -- certainly when measured by bonds outstanding and the EBA introduced caps on banks'credit /debir positions .... under pressure from the central banks. At the same time, the Ecu discount has widened to the point at which it is significant, enduring and volatile. The evidence in Figure 4 suggests that these events are connected.

The Market ECU, as cleared by the EBA, is a separate currency -- albeit one issued co-operatively by several private banks. Thus, the ECU's exchange rate will fluctuate with supply and demand -- unless action is taken to keep it at a target rate. The target is usually assumed to be par with the value of the basket, if EMU happens. In practice, any "homing" pattern of the ECU relative to target would derive from profit-seeking trading carried out by the "basket-making" banks. This pattern is partly analogous to central bank intervention except that the trading is profit, rather than policy, driven. In a public currency system, the central bank would act to stem any slide of the currency either by raising interest rates or intervening. For the ECU, the former -- in a very mild form has been suggested (see Question 6). The basket-makers undertake the second option, intervention, when it is expected to produce a risk-adjusted profit opportunity. However, such transactions result in a long position in the ECU-clearing system, the magnitude of which is now capped. This mechanism was introduced in June 1993 -- initially for information purposes only, but with significant fines levied, after October 1993, for breaches. The effect would be noticeable only in periods of heavy flows out of the ECU.

With a limited number of basket-makers, much of their capacity will be required to facilitate routine customer business. Thus, the surplus available for "risk trading" is likely to be strictly limited, leaving the ECU parity at the mercy of volatile flows of payments -- most importantly of unpredictable European Commission budget disbursements. Against this background, it seems likely that traditional institutional investors have liquidated some of their ECU bond holdings, selling their ECU proceeds for hard currencies. Asset-swappers seeking to benefit from credit spread differentials between currencies have purchased some of these bonds. Because bank borrowings denominated in ECU fund the purchases, they have no impact on the net demand for ECU versus other currencies.

A crucial question that must be answered in the near future is how will issuers fund the heavy redemptions that are imminent. Taking one extreme scenario, if an issuer has to buy ECU outright to redeem an entirely asset-swapped bond, then these purchases would create powerful upward pressure on the ECU currency. At the opposite end of the spectrum, if an issuer borrowed the ECU required for the redemption and the bonds were all held by investors who then sold the ECU for say Deutschemarks, then heavy downward pressure on the ECU rate would develop. Unfortunately, no data is available to establish the true situation. These payment flows appear sizeable in relation to the capital committed to trading in the ECU market, and this situation alone makes for volatile movements of the ECU versus the basket.

Figure 4. Net Bond Issuance/Redemptions and Divergence of the ECU From the Basket, 1993-97

Not available on the server, please see the printed publication

5. Will there be any official intervention to support the ECU?

It is difficult to envisage explicit and concerted intervention. The EMI's tasks are limited: It must "facilitate the use of the ECU and oversee its development..."(Article 109f). This mandate does not impose a duty of intervention, and the EMI has not been endowed with any resources to do so. Moreover, the Maastricht Treaty was specifically structured to ensure that monetary policy of the individual national central banks remained unfettered in the second stage of the move to EMU. Any scheme for compulsory intervention would offend that principle, even if the sums involved were a trivial proportion of total money supply.

6. What can be done to stabilise the ECU versus the basket?

The basic requirements for restoring the ECU include improved confidence that EMU will occur and that the legal framework for the continuity of ECU contracts is robust. The proposed Regulation should be announced as rapidly as possible, and no impediment seems to exist to enacting it soon, but the start of Stage Three of EMU as the effective date.

However, as the EMI's duties include "overseeing the development of the ECU" it may wish to investigate any actions that could be taken to improve the structure of the ECU markets. Accordingly, the EMI could encourage the EBA to improve its payment clearing system.

Two technical measures seem possible:

- Interest rate mechanism (IRM). This mechanism would vary the interest rate payable for balances due in the daily clearing of ECU payments so that market forces would draw the ECU towards the value of the basket. The EBA's Delta Study Group discussed this measure extensively, but no progress was made in implementing it. Substantial movements in very short-term interest rates may be needed to improve the payment-clearing process.

- Permitting delivery of baskets in the settlement of ECU obligations. This was standard practice prior to 1987, when the link was abolished on the grounds of administrative efficiency. To maintain that efficiency and security, fungibility might be permitted only on a few specific occasions -- in line with practice in the futures markets. This measure would restore explicitly the close link between the value of the ECU and the basket. Moreover, the European Commission could examine whether some of its annual ECU40 billion of transactions could use the actual basket rather than the ECU.

In light of the approach adopted at the Madrid Summit, it is in the EBA member banks' commercial interest to maintain ECU clearing volumes and build its payment system into a major cross-border system for large-value payments that do not have to be routed via the proposed TARGET system for "monetary policy" payments. Because the EU is based on the concept of open and competitive markets, TARGET will have to recover its costs; thus, a competitive opening may develop for the EBA's system. An inadequate response to current problems may not encourage customers to use the EBA's system in the future.

7. Can I ask for my bond to be repaid in component currencies?

The traditional prospectus makes provision for repayment in a component currency rather than the ECU only if the ECU is no longer used as a unit of account by the European Union or in the European Monetary System. Even if EMU does not occur, abandoning the ECU seems a remote possibility.

8. What happens now that the single currency is to be called the "Euro" and not the ECU?

Article 109L(4) of the Maastricht Treaty prescribes the process of converting the ECU basket to the new currency, and the Madrid Presidency Conclusions, in paragraph 2, state that "the specific name Euro will be used instead of the generic term "ECU" used by the Treaty to refer to the European Currency Unit". Presumably, this renaming will be given legal force and precision by the new Council Regulation that the Summit required to be prepared by the end of 1996. The sooner this Regulation is drafted and published, the better for boosting investors' confidence.

9. Will the ECU currency be converted 1:1 into the new single currency?

Users of ECU-denominated contracts have explained the importance of "legal certainty", and the EU is now committed (Presidency Conclusions A, paragraph 6) to complete technical preparations for a Regulation by the end of 1996. According to the Madrid Conclusions this Regulation will:

- confirm that "the official ECU basket will cease to exist" after the start of EMU, and

- provide that "In the case of contracts denominated by reference to the official ECU basket of the European Community, in accordance with the Treaty, substitution by the Euro will be at the rate of one to one, unless otherwise provided in the contract."

In the United Kingdom, the Financial Law Panel has continued to advocate that the basket ECU be continued after the locking of exchange rates. The International Primary Markets Association (IPMA) has criticised this view, and these statements by the Heads of Government at Madrid made explicit the intention to create a monetary union in which obligations currently denominated in "ECU" will be completely redenominated 1:1 into "Euro".

10. What exchange rate will be used to fix the ECU to the Deutschemark?

That will depend on the evolution of the foreign exchange market in the interim. However, the decision on EMU entrants will be taken in early 1998, and exchange rate stability for the preceding two years is likely to be the effective part of the ERM convergence criteria now that the bands are 15% rather than the 21/4% in force when the Treaty was signed. Whatever the near-term turbulence, serious currency fluctuations in 1996 or 1997 could prove a barrier to EMU entry; thus, stability will be a priority for policymakers. Suggestions have been floated that rates could be locked in at the average rate of the preceding period -- which would be several months at least.

11. What are the mechanics of the ECU conversion to the Euro?

The only constraint on the process that is decided already is the Treaty provision that the act of locking rates together "shall by itself not modify the external value of the ECU" (Article 109L4). The Treaty is carefully silent on any change in rates between the entrance examination (now scheduled for early 1998) and the moment of locking at the end of 1998. However, for the purpose of illustrating the mechanics, we shall use the simplifying assumption that the exchange rates are unchanged from current levels.


Figure 5. Illustration of ECU/Euro Conversion -- Assuming Current Exchange Rates are Unchanged
Exchange Rates
Closing ECU Basket 31 Dec 98 Closing 31 Dec 98 Opening 1 Jan 99
Currency Currency Components External Value, $ ECU Basket = Euroa =
Deutschemark 0.6242 = 0.425 1.89 1.89 (Locked)
Pound Sterling 0.08784 = 0.135 0.83 Non-Participating
French Franc 1.332 = 0.264 6.50 6.50 (Locked)
Italian Lira 151.8 = 0.096 1982 ?
Dutch Guilder 0.2198 = 0.134 2.11 2.11 (Locked)
Belgian Franc 3.301 = 0.109 38.8 38.8 (Locked)
Luxembourg Franc 0.130 = 0.004 38.8 38.8 (Locked)
Danish Krone 0.1976 = 0.035 7.30 Non-Participating
Irish Pound 0.008552 = 0.014 0.81 0.81 (Locked)
Spanish Peseta 6.885 = 0.056 159 ?
Portuguese Escudo 1.393 = 0.009 191 ?
Greek Drachma 1.44 = 0.006 312 ?
ECU Basket 1 = $1.286 b 1 Euro

a We have calculated these exchange rates and rounded to three significant figures. The exact conventions should be part of the Regulation on the legal framework. We have shown as "locked" only the exchange rates of the group usually described as the "core group".

b The value of the market ECU is currently $1.251, i.e. a 2.8% discount to the basket.

In this example, the final external value of the ECU is $1.286, and on 1 January 1999, the Euro will be traded on the foreign exchange markets with an opening value of $1.286. During that day, and subsequently, it will fluctuate up and down, but the spot conversion rate of the DM will remain at DM1.89 per Euro (in this illustration). In contrast, non-participating currencies, such as sterling, will be free to move against the Euro within whatever exchange rate regime is in operation. The basket will cease to exist at the end of 1998 and no longer be of any relevance.

12. Will ECU bonds that mature in 1999 and afterwards, be repaid in the new single currency?

This is the intention of the Heads of Government, unless the contract explicitly provides otherwise. The Madrid Summit reiterated the Treaty commitment to end the ECU basket at the moment when the third stage of EMU starts on 1 January 1999. Combined with the commitment to ensure 1:1 ECU/Euro conversion, this intention should add to confidence that ECU bonds with typical prospectus wording (see Appendix V) will be repaid in Euro. Figure 6 shows that such bonds have been issued, overwhelmingly, by public sector issuers associated with the EU, and they seem unlikely to challenge the Madrid proposal. The proposed Regulation will force private sector issuers to follow suit.


Figure 6. Distribution by Issuer Type of ECU Bonds Outstanding After 1 Jan 99 (ECU in Billions)
Amount in Billions ECU Amount in Pct.
Italy 15.9 24
· Eurobonds 4.9
· CTE 11.0
France 17.8 27
· BTAN 1.7
· OAT 16.1
United Kingdom 2.8 4
Council of Europe 1.7 3
EEC 1,46 2
EIB 5.6 9
Others 20.1 31
Total ECU 65.6 100 %

Note: Figures may not sum due to rounding.

Sources: Ecu Banking Association and Eurostat.

13. Will ten-year Bunds, OATs etc. be repaid in the new single currency?

On the timetable envisaged in the Treaty and reaffirmed at Madrid, obligations of participating Member States that mature after July 2002 can only be repaid in Euro because that will be the only currency in those states. That deadline is specified to be "at the latest". Moreover, once the final step of introducing Euro notes and coins has started, it might seem perverse for public administrations not to have converted completely.

14. What happens to ECU deposits?

There appears to be little specific documentation for most ECU deposits. It should be feasible for the EBA to introduce standard deposit definitions that bring ECU deposit contracts fully within the Council Regulation proposed by the Madrid Summit, ensuring a 1:1 conversion to the Euro. This certainly is essential for ECU swap contracts that run past 1998 and for ECU deposit future contracts that are likely to be listed in March 1997 with expiration dates in 1999.

15. What will happen to ECU swaps?

· ECU interest rate swaps. The new ISDA recommendation for the standard definition of the ECU was specifically designed to ensure the 1:1 conversion of ECU contracts to the new single currency. This recommendation superseded the 1991 definition and, to the layman, appears to be firmly within the proposed Regulation but drafts of the Regulation should be scrutinised carefully to ensure that is the case (see Appendix V for the text of the standard definitions).

· ECU/EMU participating currency swaps. The proposed Regulation will lay out the legal framework and the objectives of this are specified in the Madrid Conclusions. Annex I specifies, in paragraph 10, that the substitution by Euro "should not of itself alter the continuity of contracts". "In the case of fixed interest rate securities and loans, this substitution will not of itself alter the nominal interest rate payable..." (see Appendix IV for full text).

16. What will happen to credit spreads in EMU?

The only theoretically perfect creditor in the paper-based monetary system (used by most major countries since the end of the Gold Standard) is the entity that has the power to print more of the paper money. Parliaments in many EU States may have delegated certain authority to an 'independent' central bank for the time being. However, the Parliament's unchallenged power to recall its authority makes any debts issued under the Parliament's authority a perfect credit in that State's paper money.

In EMU, Parliaments choose to cede the right to print Euros to the ECB and cannot recall that power without leaving the system; thus, Governments will not be theoretically perfect creditors. However, the convergence criteria are designed, in part, to ensure that only exceptionally creditworthy Governments will be admitted to EMU. Thus, credit spreads typically should be modest -- no more than say 50 basis points for long-term bonds (much smaller than the Treaty's 200-basis-point limit). However, if an EMU member state later adopts financial policies that threaten the creditworthiness of its government debt, spreads could widen sharply to levels that genuinely reflect default risk.

17. What will happen to ECU interest rates - short and long term - as EMU approaches?

Long-term interest rates seem likely to move towards those of the countries judged (and after "early 1998", agreed) to be EMU entrants. The basis of valuation should cease to be a comparison with long-term basket rates after the start of Stage Three, when the basket should cease to exist. Instead, the question should be: What interest rate premium is required to offset the "expected" change in the ECU versus, say, the Deutschemark? Short-term interest rates are likely to be driven by the overnight ECU rate used in the clearing of ECU payments. At present, this rate is explicitly calculated as a basket of the component currencies' rates.

Not all currencies will participate in Stage Three at the outset. The financial markets will be fulfilling their traditional role of attempting to discount the outcome as the politicians make the decision in early 1998 on whether to move to Stage Three and which Member States participate. In a perfectly functioning market, a discontinuity will develop in the term structure of ECU interest rates at the moment when Stage Three starts -- the overnight rate just beforehand should be that of the basket and the rate afterwards will be that of the new single-currency Euro. The discontinuity will reflect the exclusion of the high-yielding members. Period rates spanning the start date should blend the two rates appropriately.

However, in the interim, the level of the ECU exchange rate against the basket may also be a powerful influence. If it is at par, then there will be no need for interest rates to compensate for any expected movement between them. However, the reason for the parity may be that the EBA has installed a system to allow interest rates payable in the clearing to deviate from the basket (see Question 6).

18. What ECU-based investment strategies are available to express a view on the outcome?

The yield curves for national currency bonds issued by the Governments of say Germany and France currently imply that interest rates beyond 1 January 1999 will be so close that they may be indistinguishable from a monetary union. If the EU carries out the plans specified in the Presidency Conclusions of the Madrid European Council, ECU-denominated bonds will be redenominated into Euro. Thus, for example, French Government bonds maturing after 1999 should trade on the same forward yield -- whether in francs or ECU -- if the markets are consistent and believe that EMU is irreversible.

In addition, the prospect of a 1:1 conversion of post-1999 ECU securities into the Euro should encourage investors to purchase such securities to benefit from the elimination of the current 3% discount of the ECU versus the theoretical value of the basket. Combining these two effects, an ECU-denominated ten-year French Government bond could outperform its French franc equivalent significantly in the period to 1 January 1999 -- unless its performance is offset by any ECU depreciation versus the French franc. This risk can be hedged.

19. What should liability managers do?

Liability managers should do the following:

· Check their prospectus to ensure that no uncertainties exist that might cause investors to shun their bonds.

· Review the strategies available for purchasing the ECU required to meet eventual obligations. However, the complexities of any associated swaps may require individual analysis.

· Consider the suspension of existing issuance programmes until the ECU has moved close to fair value, combined with liability management programmes that provide for subsequent ECU bond issuance that will roll into "Euro" bonds that are an integral part of the post-1999 management plan.


Figure 7. Large-Scale Issuers and Redeemers, 1995-99 (ECU in Billions)
Year Issuers Amount Redeemers Amount
1995 France ECU4.8 Italy ECU7.0
Italy 4.7 U.K. 2.0
U.K. 2.0
Total ECU15.6 Total ECU20.6
1996 Italy 4.9
U.K. 2.0
EEC 1.7
Belgium 1.3
Spain 1.0
Denmark 1.0
Norway 1.0
Total ECU22.0
1997 Italy 3.3
U. K. 2.0
France 2.4
EIB 1.8
Total ECU18.0
1998 Total ECU21.0
1999 Total ECU19.0

Source: Eurostat.

20. What happens if there is no EMU?

If the prospect of EMU receded into the indefinite future, the ECU market's future could be bleak indeed. However, only a remote chance exists that the European Communities would cease to use the ECU as their unit of account. Traditional bond prospectuses use that event as the test of whether repayment may be made in a component currency with the amount calculated by reference to the basket. Accordingly, the floor to the ECU/Basket exchange rate might be the rate at which bond issuers find it attractive to repurchase their bonds.

20-02-1996

(*) European Investment Research, Economic and Market Analysis. Salomon Brothers London (0171) 721 3921). This is the first part of a Salomon Brothers two volume publication. The second part is an appendix of background material awailable separately from Salomon Brothers.
(1) The analysis in this paper is based on the assumption that EMU will proceed according to the schedule laid down by the Treaty and reiterated by the Heads of Government in December 1995. Despite the current discussions of delay, legislation and other plans are likely to be based on the same assumptions -- until the moment when any decision to delay is taken.
(2)The Ecu Banking Association (EBA) organises the payment-clearing system.
(3) Eculand -- The Thirteenth Member, Salomon Brothers Inc, 1991, and Visits to Eculand -- Reflections Upon its Financial System, Salomon Brothers Inc, 1991.

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