Publication of indicators of financial integration in the euro area

Today the European Central Bank (ECB) is publishing for the first time indicators of financial integration in the euro area. The published indicators are accompanied by a report providing an overall assessment of the degree of financial integration in the main financial market segments of the euro area, ranging from retail loans to wholesale equity trading.

The ECB fosters European financial integration within its field of competence. A well-integrated financial system contributes to a smooth and effective implementation of monetary policy throughout the euro area and increases the efficiency of the euro area economy. Moreover, deeper financial integration will contribute to the performance and stability of the financial system.

The resulting statistics indicate that the degree of integration varies greatly depending on the market segment. The unsecured money market has been fully integrated since shortly after the introduction of the euro. The repo market is also highly integrated, albeit to a lower extent. Government bond markets have integrated considerably. The indicators for the corporate bond market, which has grown significantly since the advent of the single currency, also point to a rather high degree of integration. Progress has also been made in the integration of euro area equity markets, where equity returns are increasingly determined by common factors. Banking markets are generally much less integrated.

The financial integration indicators will be published semi-annually on the ECB’s website. The report will be updated annually, with the aim of monitoring the progress of financial integration in the euro area. Furthermore, while the first report already focuses on important dimensions of financial systems, spanning financial and banking markets, the coverage of the indicators may be further developed. In particular, it is envisaged to add indicators on underlying factors of integration related to financial institutions and market infrastructures.

To obtain a hard copy of this report, please contact the ECB’s Press and Information Division at the address given below. Alternatively, you can download the full report from the ECB’s website.