Business
Financial Integration in Europe? PR of ECB
Financial Integration in thr EURO
ECB Building Frankfurt
(Source: medien-boldt)
(Source: medien-boldt)
“¢ Recent financial turbulence should not hamper further integration.
“¢ Further developing European capital markets and integrating retail-banking markets enhances the financial system´s resilience.
The 2016 edition of the ECB´s report on Financial Integration in Europe published these days “žat a joint conference with the EU Commission at the ECB in Frankfurt“, shows that financial integration in the euro area is advancing. Retail bank lending rates continued to converge across countries, for example. However, the trend has slowed since spring/summer 2015, partly due to offsetting developments in different market segments. Some divergence in bond yields can be explained by increasing risk aversion in global financial markets and countries´ fundamentals.
The report highlights a series of policy actions that support the financial re-integration trend. In addition to the ECB´s expansionary monetary policy, the Single Resolution Fund became operational this year. ECB Banking Supervision is addressing remaining cross-country heterogeneities in the regulatory framework.
Looking ahead, the ECB emphasises that the European capital markets union and all the other steps proposed in last year´s Five Presidents´ Report need to be pursued with determination in this context.
Looking ahead, the ECB emphasises that the European capital markets union and all the other steps proposed in last year´s Five Presidents´ Report need to be pursued with determination in this context.
The ECB´s report makes a strong case for strengthening Europe´s more bank-oriented financial system by better developing and integrating capital markets, notably in the equity space. The analysis explains how this can improve the system´s resilience, enhance cross-country risk sharing and improve the financing options of firms and households. These economic benefits are stronger for equity markets, foreign direct investment and retail bank lending, whereas too much short-term debt may be counterproductive.
ECB Vice-President, Víctor Constâncio, said: “We can reach the economic benefits of transforming the financial system, if the European Capital Markets Union is ambitious. At the same time, however, the perimeter of macro prudential supervision and regulation needs to be extended in order to address new financial stability risks associated with such a process.“
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