Pan-European investment has become one of the rallying cries in the lull before the launch of the euro, and the relentless rise in continental European share prices this year is a direct response.

Given the build up of private pensions in Europe and the discovery of the joy of shares as bond yields shrink, it is hardly surprising commentators are seeing euro signs.

But while derivatives and bond markets are already transcending borders with ease, hence the frenzied reshuffling of European derivatives exchanges, investors may find the concept of borderless equity investment harder to realise.

Stock exchanges have attained an unnatural status within the national psyche. Europe may have lost numerous names from its roster of grand exchanges, but it still boasts over 30 bourses. They are all fighting for survival, supported by rules and regulations which will slow the pace of change.

As Dr David Miles, professor of economics at Imperial College argues: "Monetary union does not obviously lower any barriers to a regional market, other than currency risk."

However, the one thing the euro will do is introduce competition to a world cosseted by national barriers. European pension funds dwarf the British, but up to now equities have attracted a miserly slice of the pie and that has been concentrated domestically for reasons of currency and convenience.

Fund managers were under little pressure to search for returns in equities when they could get double-digit yields on European government bonds. But a single European interest rate has removed that cushion.

And fund managers in a posteuro world will have to look at all neighbourhoods within Euroland if they are to survive competition.

Businesses can migrate with alarming speed. So those markets with high transaction costs, cumbersome rule books or unfair advantages for local participants will see investors go elsewhere.

This should not alarm anyone other than stock exchange chief executives.

An efficient cross-border stock market would make equity investment more attractive for the millions of Europeans being weaned off state pensions by offering the virtues of diversification. It would reduce the cost of capital for European companies, encouraging investment. And it would ensure that capital went to companies offering the highest returns and greatest potential for creation. Some companies might lose, but Euroland would gain.

So what should this new market look like? Stock exchanges would retain a role, encouraging listings for domestic businesses and nurturing smaller companies that would be less obviously appealing to the international investor. But there should be a single, low-cost electronic trading platform which could be accessed via what Mark Howdle of Salomon Brothers has labelled "virtual exchanges".

There are already signs of how a single electronic trading platform could emerge, with the Austrian exchange adopting the German system. This trading platform could also be connected to other global markets, hence the talks between Deutsche Borse, the German stock exchange, and the US's Nasdaq where a number of predominantly high-tech Irish stocks are quoted aimed at "co-operation".

Of course, there needs to be agreement over the best trading platform.

The key issue is that investors should be able to trade seamlessly from one to the other, preferably using a single screen and clearing system. National interest groups may slow down this evolution, but the end game is already looking clear.