The dramatic evolution of financial markets in the 1980s and 1990s, accompanied by increasing institutional integration between nations (most notably in the EU), have fostered a widespread belief that governments - particularly those of small economies - have essentially lost the power to pursue sovereign, independent economic policies. At the same time, it is widely assumed that the loss of monetary-policy control is a major opportunity cost for a country adopting a rigid exchange-rate regime or, in the European context, for countries joining the EMU. This volume assesses the impact of monetary and financial integration on small "open-economy", "policy-taking" countries in western Europe. INDICE Part 1 Introduction: the role of short-term financial markets Part 2 Background indicators of economic and financial development and integration: indicators of economic development and economic Part 3 Money market formation and transformation: the emergence of efficient domestic money markets - facts and drivers Part 4 Money market development and monetary policy operations: inerest- rate management in practice - a few benchmark examples Part 5 External arrangements - exchange-rate regimes and capital controls: formal exchange-rate regimes and nominal exchange-rate developments Part 6 Measuring capital mobility - the degree of direct money-market integration: international Fisher parity Part 6 Measuring capital mobility - the degree of direct money-market integration: international Fisher parity Part 8 Money market development and monetary policy options - concluding remarks: no indication that general economic indicators explain EMU