The arrival of the euro should dramatically open up the numbers of choices in settlement and routing of payments for those operating across borders. But Hansjoerg Nymphius at Deutsche Bank in Frankfurt cautions: This is fine, but if you take a closer look it could be a nightmare!"

There are two parties at least to any transaction, so one party cannot make the choice on its own. "They need to know what the other party is doing."

The challenge for international European banking groups such as Deutsche Bank is to take care of the complexities of the new market and to take the hassle out handling these different systems.

Nymphius warns: "In January 1999, we do not have a level playing field in Euroland. We may have the same currency, but we still have national banking systems with their own procedures and different regulations. This is even down to reporting matters, where each country does it differently."

Currently, there is no real cash management cross-border in Europe, because of the conversion issue and the regulatory and legislative barriers, he says. "With the euro, you will at least have the obstacle of conversion out of the way. So we will be offering things like sweeping and pooling into one euro account."

Customers will have to ask themselves if it will make sense to maintain euro accounts in different countries across the area. He recognises that such decisions will take time.

The advent of the euro will mean a broader cash market with increased liquidity. Nymphius says: "At the end of the day, this will fertilise money markets." He sees it going in the same direction as the dollar market.

At present there are arbitrage possibilities which will be reduced with the new market. "It is always positive if you have high liquidity in the market ," he says. But the risks associated with dealing in smaller markets are reduced, which should automatically lead to reduced returns. "So to get better returns, you will have to be more active. These active players should receive similar returns as in the US market, which has high liquidity."