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11 May 2015

Progress on financial integration: the scoreboard on the way to CMU

The financial crisis struck a huge blow to the progress of financial integration in the euro area – a prime objective of monetary union and the Single Market. However, it is clear from bond yield spreads that integration has recovered substantially – and now CMU is getting underway.

The ECB’s financial integration index (FINTEC) gives an encouraging overview of the progress in restoring integration even before CMU becomes operational. Despite the recovery, there is still a mountain to climb in creating a single, borderless capital market – shown starkly in the index below that measures cross-border holdings.


What is FINTEC?The price-based Financial Integration index is constructed from a selection of price-based indicators that cover the four main market segments: money, bond, equity and banking markets. The quantity-based FINTEC uses intra-euro area cross-border holdings expressed as a percentage of euro area total holdings.Complete integration would be an index of 1.00

The full analysis article and conclusions are available to consultancy clients.

© Graham Bishop

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