Financial integration in Europe rebounds: ECB report

Overall, financial integration in Europe has returned to a level close to that recorded before the sovereign debt crisis, the European Central Bank (ECB) said here Monday.

In an annual report published at a Conference on Financial Integration and Stability held together with the European Commission, it said financial integration in the eurozone had made good progress in most market segments and increased in 2014 in comparison with the level recorded in 2013.

The trend could be seen across the money, bond and banking market segments, while the picture for the equity market segment was more mixed.

Particularly, financial integration had improved as a result of the establishment of the banking union, in particular the single supervisory mechanism and the comprehensive assessment of banks that preceded it, as well as single resolution mechanism.

Moreover, the series of unconventional monetary policy actions taken by the ECB have helped counter financial fragmentation, said the report.

The report also pointed out that it remains crucial to fully implement the banking union in order to sustain the progress made in financial integration, promote its further development and limit the potential negative side effects of financial fragmentation in a crisis situation.

"European financial integration has improved over the past two years, and that has also been to the benefit of the access to finance by firms. Our measures have reduced financial fragmentation and, since last year, both the level and the dispersion of credit interest rates have been reduced, especially for small and medium-sized enterprises," said Vitor Constancio, vice-president of the ECB.

"Much remains to be done to deepen financial integration further. The capital markets union project, launched by the Commission, can make a positive contribution to that goal," said Constancio. Endit