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09 May 2014

Graham Bishop's Blog: Euro area poised to deepen its integration – profound change ahead for EU financial markets


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Europe Day is a good moment to reflect on the progress of the European Union since the Schuman Declaration 65 years ago that triggered the process of "ever-closer union".


Direct elections to the Eighth European Parliament will take place shortly – and coincide with planned elections in the Ukraine. The cosy blanket of complete security that has settled on Europe since the 1989 fall of the Berlin Wall and dissolution of the USSR has suddenly been pierced. Whether it is to be ripped apart entirely is not yet clear. For Russia, the stakes cannot be higher – playing economic hard-ball with a neighbouring Union that is both ten times your size and the biggest customer for your major exports is a dangerous game – but one which is more likely to be apparent on a five-year horizon than the media’s usual five–day view. The co-incidence of the two elections may persuade rather more EU electors to exercise their freedom than otherwise.

The euro area is integrating ever more deeply. The next five-year term of the European Parliament and Commission may see a step change in the recognition of the implications of the measures already agreed. These may have a profound effect on many aspects of securities markets:

  • The economic policies that drive the shape of the yield curve;
  • Credit spreads of governments;
  • The nature and scale of market finance that must replace much bank funding of the economy;
  • The regulatory response to these economic forces – especially on sovereign debt;
  • The size, structure and riskiness of Europe’s banks and insurers

I will continue to analyse the implications of political, financial, economic and budgetary integration – as well as continue to argue that eurobills should be seen as another excellent step along the road to a genuine economic and monetary union. The outline of my detailed proposal for a Temporary Eurobill Fund is here.

Rolling blog

Graham Bishop Consultant on EU Integration - Political, Financial, Economic, Budgetary



© Graham Bishop


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