Internal Market and Services Commissioner Charlie McCreevy said: “These are the facts about European financial integration and how it is progressing. This year the focus is on new Member States and on retail integration. I am always ready to discuss how best to deliver to Europeans the real benefits of the single market. But we need a sound, objective basis for this debate. The Financial Integration Monitor together with our eagle eyes on transposition of the action plan, evidence base policy making and the Better Regulation agenda are key instruments in this work. .”
The European financial system is in constant evolution. New structures and financing techniques are being developed in response to changing pan-European possibilities offered by the framework established by the Financial Services Action Plan (FSAP).
This year’s report looks into retail markets in greater detail and concludes that retail integration has been very much limited to cross-border establishment for accessing local markets. However, new distribution channels, in particular online facilities, are making consumers gradually less dependent on traditional channels of local establishment and may eventually facilitate the integration of retail financial markets. So far, only in a few retail areas such as savings accounts and UCITS is some direct cross-border activity taking place.
Partly because of the less advanced level of financial development, direct and indirect cross-border retail activity has been thriving in most of the new Member States. This is reflected in the very high level of foreign, mainly EU15, ownership in the new Member States’ financial institutions. Foreign ownership on average amounts to 70% of total banking assets in the new Member States, compared to an average of 24% in the EU15.
The potential for further growth of these markets is high. The important links that already are in place between the new Member States and the rest of the EU facilitate their integration while, at the same time, raising new challenges in terms of financial stability and consistency of supervision.
Background to the Financial Integration Monitor 2005
The FIM 2005 report is the second annual report in follow-up to the July 2000 request from the EU’s Council of Finance Ministers to develop indicators to assess the state of financial integration. At the same time, bringing economic data and evidence into the policy debate is one of the elements of the evidence-based policy-making the Commission is embracing.
The report is available at:
http://europa.eu.int/comm/internal_market/finances/cross-sector/index_en.htm
