EU financial markets: research highlights benefits of closer integration

EU financial markets: research highlights benefits of closer integration

The completion of the single market for financial services in Europe will create substantial benefits for consumers and stimulate economic growth, according to new research commissioned by the European Financial Services Round Table.

The results of the research project - led by the Institut fur Europaische Politik (IEP) and the Zentrum fur Europaische Wirtschaftsforschung (ZEW) - show on conservative estimates, closer integration of the European financial services market would create additional economic growth across Europe of at least 0.5%, or EUR43 billion per annum, based on year 2000 figures.

The report estimates substantial reductions in industry costs would be achieved, resulting in lower prices for consumers. Figures for the European mutual fund industry show potential annual cost savings of EUR5 billion.

The research also indicates increased competition would force lenders to respond more quickly to falling market rates; diversified Europe-wide portfolios would see better risk/return profiles for investors; and higher acceptance of the euro would lead to falling liquidity premiums and lower transaction costs.

Pehr Gyllenhammar, the chairman of the Round Table, says: "This independent report is a robust economic analysis of the potential benefits of the single European market, by a group of distinguished economists. Its careful analysis identifies substantial benefits for European consumers, emphasises the economic importance of making further progress to remove barriers to choice and competition, and highlights the importance of policy makers tackling these issues swiftly and decisively."

The European Commission is today also calling for further rapid progress to be made to meet European Union targets of an integrated securities and risk capital market by 2003 and a single European financial services market by 2005.

Romano Prodi, European Commission president Romano Prodi says: "Implementation of the Financial Services Action Plan must not be allowed to falter or fail. That would undermine our whole strategy for sustainable growth, competitiveness, stability, employment and innovation. Now, more than ever, political statements must be translated into hard commitments and firm agreements."

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