A mixed development of financial integration, highlighting the need for an ambitious agenda for a common capital market.
It prints the ECB in its annual report on financial integration in the euro area, published on Friday.
The overall financial integration slowed down in the last year after a few years of re-increased integration in the wake of the setback after the financial crisis. The price-based measure of integration was volatile in 2016, while the overall kvantitetsbaserade measure leveled out.
”This was a result of countervailing effects within and between different markets, partly influenced by the different economic prospects across countries, fluctuations in global risk aversion and political uncertainty. On the other hand continued the ECB’s monetary policy to provide support to the financial integration,” writes the ECB.
New quality-based indicators show that risk sharing remains low and that the private financial risk sharing does not contribute so much. Thus, a large part of inkomstchocker in the member states a direct impact on consumption.
These results underline the importance of completing the banking union and to take more steps towards an ambitious kapitalmarknadsunion. For example, should the current review of regulation, such as Capital Requirement Directive (CRD) and the Bank Recovery and Resolution Directive (BRRD) lead to concrete and rapid progress, including the harmonisation and recognition of national sectoral rules. Furthermore, the improvement and harmonization of insolvency rules to give support to the integration and development of the capital market, according to the ECB.
”The banking union and the kapitalmarknadsunionen is without a doubt the two key initiatives in order to obtain financial integration in the EU in the coming years. The two should be seen as mutually supportive in order to take the internal market for financial services to the next level,” said ECB’s over Vitor Constancio in a comment.
The report notes further that the development of pan-european banks remains limited. Further mergers and acquisitions across borders can contribute to a very desirable bankkonsolidering in some member states, but also to create local competition. It can also promote the integration at the consumer level that increases the spreading of risk and help to address the management of the baltic, called it.
In addition to the above – mentioned measures can, according to the ECB also other obstacles for mergers and increased consolidation across borders need to be removed. For example, it could include a harmonisation of consumer protection and to ensure the euro area as a legal entity as regards the calculation of the Basel requirements for systemically important institutions. Greater harmonisation of taxes may also be applicable, it is argued.
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