UNITS OF ACCOUNT AND THE INTERNATIONAL BOND MARKET

COMPLEX DEBT INSTRUMENTS ARE BEING DEVISED TO ADAPT TO FLOATING EXCHANGE-RATES. BOTH THE EUROPEAN UNIT OF ACCOUNT (EUA) AND THE EUROPEAN COMPOSITE UNIT (EURCO) PROVIDE FOR BORROWING IN FOREIGN CURRENCIES. IN EITHER CASE NEITHER THE BORROWER NOR THE LENDER WILL HAVE TO BEAR THE TOTAL RISK OF FOREIGN-EXCHANGE CHANGES ALTHOUGH THE STABILITY AFFORDED BY THE EUA AND THE EURCO ARE NOT ACTUALLY EQUIVALENT. APART FROM THEIR MAIN FEATURE OF APPORTIONING EXCHANGE RISK BETWEEN BORROWER AND LENDER, MIXED CURRENCY UNITS MAY SHOW OTHER ADVANTAGES SUCH AS SIMULTANEOUS ACCESS BY THE BORROWER TO SEPARATE NATIONAL CAPITAL MARKETS, AS WELL AS INCREASED STABILITY DUE TO THE IMPACT ON THE SECONDARY TRADING DUE TO THE BROADER MARKET. MIXED CURRENCY BONDS ARE STILL SOMEWHAT EXPERIMENTAL WITH MORE USAGE DEPENDING ON A REASONABLE UNDERSTANDING OF THEIR FEATURES BY ALL PARTIES. NOTES.