FRANKFURT – Despite great progress in integrating the European Union’s financial markets, barriers remain in key areas: retail services, bank mergers and acquisitions, and tax harmonization, to name but a few. Completing a single financial market would boost economic growth and prosperity in every member state. It would also broaden consumer choice, open a host of new investment opportunities, strengthen the EU banking sector, and make Europe a center for financial innovation.
What will the single European financial market of the future look like? First, there needs to be a level playing field within the EU. Second, consolidation of Europe’s banking sector must be extended, with all protectionist barriers or other obstacles to mergers and acquisitions eliminated. Third, the European market place should be fully integrated into the global network of financial centers, particularly those in the United States and Asia.
The EU’s Financial Services Action Plan, launched in 1999 and implemented in stages, focused mainly on securities markets. It boosted competition and innovation for professional traders and encouraged institutional market players, in particular, to trade across EU borders. As a result, considerable progress was made in the “wholesale” securities sector. Retail customers, however, were largely ignored.
But the aim of creating a “European home market” should not be reserved for wholesale market players. Retail customers deserve the chance to buy products and services from all member countries, and it would be in banks’ own interest for them to be able to do so. For example, according to surveys by the European Commission, more than 10% of European banking and insurance customers would like to use foreign products and services. But only 5% of customers currently have an account with a foreign bank.