ECB: Eurozone Financial Integration Remains Relatively Low
The European Central Bank states that the Eurozone does not take full advantage of cross-border interbank trade, while retaining barriers that inhibit cross-border banking operations and investments. The regulator also argues that cross-border interbank trading in the currency block remains relatively low, and integration with retail banks is limited. "The improvement in financial integration was particularly visible in the case of price-based indicators, especially those covering the capital markets," the ECB said.
"It is a big waste to have taken the huge step to adopt a single currency and continue to forgo the benefits that could be reaped by creating a true banking and capital markets union," ECB Vice President Vítor Constâncio stated.
Cross-sectoral differences in the return on capital decreased to pre-crisis levels, while the range of returns on debt securities issued by banks and non-financial corporations also narrowed, which indicates some integration, at least in the prices of financial instruments.
Eurozone officials have long been discussing the creation of a deposit insurance scheme, but Germany opposes it. The largest economy of the Eurozone fears that German taxpayers will be asked to bill for the rescue of weak banks on the periphery of the currency block.