European Central Bank : Financial Integration in Europe - April 2013

European Central Bank

Description

The ECB’s annual report on fi nancial integration in Europe contributes to the advancement of the European fi nancial integration process by analysing its development and the related policies.

Sujets

• European

Informations

• Publié par: Fil_Economie
• Publié le: 25 avril 2013
• Nombre de lectures: 44
• Langue: English
• Poids de l'ouvrage: 8 Mo

Extrait

F I N A N C I A L I N T E G R A T I O N I N E U R O P E

A P R I L 2 0 13

In 2013 all ECB publications feature a motif taken from the €5 banknote.

FINANCIAL INTEG R ATION IN EUROPE

A P R I L 2 013

© European Central Bank, 2013

Address Kaiserstrasse 29 60311 Frankfurt am Main Germany

Postal address Postfach 16 03 19 60066 Frankfurt am Main Germany

Telephone [phone]

Website http://www.ecb.europa.eu

Fax [phone]

All rights reserved. Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged.

Unless otherwise stated, this document uses data available as at 15 March 2013.

ISSN 1830-7140 (print) ISSN 1830-7159 (online) EU catalogue number QBAJ07001ENC (print) EU catalogue number QBAJ07001ENN (PDF)

C O N T E N T S

PREFACE

KEY MESSAGES

EXECUTIVE SUMMARY

CHAPTER I RECENT DEVELOPMENTS IN FINANCIAL INTEGRATION IN THE EURO AREA 1 Introduction 2 Money markets 3 Bond markets 4 Equity markets 5 Banking markets

CHAPTER II EUROPEAN INSTITUTIONAL REFORM

THE SINGLE SUPERVISORY MECHANISM: A PIVOTAL STEP TOWARDS A BANKING UNION

1 2 3 4 5 6

Introduction Rationale for establishing the SSM Main features of the proposed SSM regulation The benefits of the SSM Other components to complete the banking union Challenges ahead – establishing the SSM

CHAPTER III EUROSYSTEM ACTIVITIES FOR FINANCIAL INTEGRATION 1 The legislative and regulatory framework for thefinancial system 2 Catalyst for private sector activities 3 Knowledge of the state offinancial integration 4 Central bank services that foster integration

SPECIAL FEATURES

A. EURO AREA MONEY MARKET SEGMENTATION IN THE PRESENT LOW INTEREST RATE ENVIRONMENT 1 Introduction 2 Background 3 Treasury bill markets 4 Short-term repo market

8

9

1 1

1 5

1 5 1 6 2 3 2 8 3 1

3 7

37

3 7 3 7 3 8 4 4 4 4 4 5

4 7

4 7 5 2 5 6 5 9

6 5

6 5 6 7 7 3 7 7

ECB Financial integration in Europe April 2013

3

4

5 6

Short-term unsecured market Conclusions

B. THE INTEGRATION OF THE EURO RETAIL PAYMENTS MARKET – SEPA AND BEYOND 1 Why SEPA is a major driver of euro areafinancial integration and how it has evolved 2 Major benefits from the creation of SEPA 3 The remaining challenges in SEPA 4 Looking forward to the next generation of retail payments

C. SECTORAL ACCOUNTS AND REBALANCING IN THE EURO AREA 1 Introduction 2 Regional analysis of sectoral accounts 3 Rebalancing of price/cost competitiveness in euro area countries

D. US MONEY MARKETS: STRUCTURAL COMPARISON AND IMPLICATIONS FOR FINANCIAL INTEGRATION 1 Introduction 2 Overview of USfinancial system structure 3 Major policy and regulatory changes 4 US money market dynamics 5 Conclusions

STATISTICAL ANNEX

ECB Financial integration in Europe April 2013

8 0 8 4

8 6

8 6 8 9 9 1 9 3

9 6

9 6 9 8 1 0 3

1 0 8

1 0 8 1 0 9 1 1 3 1 1 6 1 2 4

S 1

A B B R E V I A T I O N S

COUNTRIES AT BE BG CH CY CZ DK DE EE IE ES FI FR GR HR HU

OTHERS ABS ACI AFME AMEX BCBS BIC BIS BRRD CBPP CCBM CCBM2 CCP CDO CDS CEPR CESAME CESR CFS CGFS CLS CPSS CRDIV CRR CSD CSM DTCC DVP EAA

Austria Belgium Bulgaria Switzerland Cyprus Czech Republic Denmark Germany Estonia Ireland Spain Finland France Greece Croatia Hungary

IT JP LT LU LV MT NL PL PT RO SE SI SK UK US

Italy Japan Lithuania Luxembourg Latvia Malta Netherlands Poland Portugal Romania Sweden Slovenia Slovakia United Kingdom United States

Asset-backed security Financial Markets Association Association for Financial Markets in Europe American Stock Exchange Basel Committee on Banking Supervision Bank identifier code Bank for International Settlements Bank Recovery & Resolution Directive Covered Bond Purchase Programme Correspondent central banking model Collateral Central Bank Management Central counterparty Collateralised debt obligation Credit default swap Centre for Economic Policy Research Clearing and Settlement Advisory and Monitoring Expert Group Committee of European Securities Regulators Center for Financial Studies Committee on the Global Financial System Continuous Linked Settlement Committee on Payment and Settlement Systems Capital Requirements Directive Capital Requirements Regulation Central securities depository Clearing and settlement mechanism The Depository Trust & Clearing Corporation Delivery versus payment Euro area accounts

ECB Financial integration in Europe April 2013

5

A B B R E V I A T I O N S

6

EBA EBF EBRD ECB Ecofin Council ECP ECSDA EEA EFMLG EFR EFSF EGMI EIOPA EMIR EMU EONIA EPC EPTG ERF ESA ESCB ESM ESMA ESRB EU EUREPO EURIBOR FDIC FISCO FOMC FRFA FSB FSOC GDP IBAN ICMA ICPF ICSD IMF IOSCO ISDA ISLA LTRO LVPS M&A MBS MFI MiFID

ECB Financial integration in Europe April 2013

European Banking Authority European Banking Federation European Bank for Reconstruction and Development European Central Bank Council of Economic and Finance Ministers Euro commercial paper European Central Securities Depositories Association European Economic Area European Financial Markets Lawyers Group European Financial Services Round Table European Financial Stability Facility Expert Group on Market Infrastructures European Insurance and Occupational Pensions Authority European Market Infrastructure Regulation Economic and Monetary Union Euro overnight index average European Payments Council European Post Trade Group European Resolution Fund European Supervisory Authorities European System of Central Banks European Stability Mechanism European Securities and Markets Authority European Systemic Risk Board European Union Repo market reference rate for the euro Euro interbank offered rate Federal Deposit Insurance Corporation Clearing and Settlement Fiscal Compliance expert group Federal Open Market Committee Fixed-rate full allotment Financial Stability Board Financial Stability Oversight Council Gross domestic product International bank account number International Capital Market Association Insurance corporations and pension funds International central securities depository International Monetary Fund International Organization of Securities Commissions International Swaps and Derivatives Association, Inc. International Securities Lending Association Longer-term refinancing operation Large-value payment system Merger and acquisition Mortgage-backed security Monetaryfinancial institution Markets in Financial Instruments Directive

MMF MRO NASDAQ NCB NFC NTMA NYSE OECD OIS OJ OMT OTC PHA Repo RMBS RTGS SCT SDD SEPA SIFMA SMP SRA SRM SSM SSP SSS STEP TARGET TR T2S UNIDROIT URD WFE

Money market fund Main refinancing operations National Association of Securities Dealers Automated Quotations National central bank Non-financial corporations National Treasury Management Agency New York Stock Exchange Organisation for Economic Co-operation and Development Overnight index swap Official Journal of the European Union Outright Monetary Transactions Over the counter Proprietary home account Repurchase Agreement Residential mortgage-backed security Real-time gross settlement SEPA credit transfer SEPA direct debit Single Euro Payments Area Securities Industry and Financial Markets Association Securities Markets Programme Single Resolution Authority Single Resolution Mechanism Single Supervisory Mechanism Single shared platform Securities settlement system Short-term European paper Trans-European Automated Real-time Gross settlement Express Transfer system Trade repositories TARGET2-Securities International Institute for the Unification of Private Law User requirements document World Federation of Exchanges

ECB Financial integration in Europe April 2013

7

A B B R E V I A T I O N S

8

P R E F A C E

The ECB’s annual report onfinancial integration in Europe contributes to the advancement of the Europeanfinancial integration process by analysing its development and the related policies.

The Eurosystem has a keen interest in the integration and efficient functioning of thefinancial system in Europe, especially in the euro area, as reflected in the Eurosystem’s mission statement. Financial integration fosters a smooth and balanced transmission of monetary policy throughout the euro area. In addition, it is relevant forfinancial stability and is among the reasons behind the Eurosystem’s task of promoting well-functioning payment systems. Without prejudice to price stability, the Eurosystem also supports the objective of completing the EU Single Market, of which financial integration is a key aspect.

In September 2005 the ECB published afirst set of indicators offinancial integration and an accompanying report assessing the state of euro areafinancial integration. Since then the work on financial integration has evolved and has resulted in the publication of a yearly report.

ECB Financial integration in Europe April 2013

K E Y M E S S A G E S

OVERALL ASSESSMENT OF FINANCIAL INTEGRATION







The fragmentation of euro areafinancial markets increased further in thefirst half of 2012. The key driver was redenomination risk, linked to fears of a possible break-up of the euro area.

Around mid-2012, the decisions by European leaders to set up a banking union and the announcement, as well as adoption, of non-standard measures by the ECB contributed to restoring confidence in euro areafinancial markets, improving market sentiment and reversing the earlier trend towards market fragmentation.

In spite of the marked improvements in market conditions since then, the climate in the financial markets remains fragile. It is of paramount importance that the momentum towards building a stronger Economic and Monetary Union is maintained. Further progress towards the establishment of a single supervisory mechanism, as well as other components of the banking union, will be a critical factor underpinningfinancial market performance this year.

MONEY MARKETS





Euro area money market conditions improved in 2012. The improvement was due to the non-standard monetary policy measures, such as the two three-year longer-term refinancing operations (LTROs) and the announcement on Outright Monetary Transactions (OMTs), as well as encouraging signs regarding the implementation of macroeconomic,fiscal and financial adjustment measures in some Member States. Going forward, lasting improvements in money markets will largely depend on the progress of the various initiatives to strengthen thefinancial sector which are outside of the scope of monetary policy.

Price-based indicators, especially overnight rates, indicate a high level of dispersion between euro area countries, while quantity-based indicators show a “home bias” regarding interbank counterparties, the latter being particularly pronounced in countries that have endured high levels offinancial stress recently. In those countries, somefinancial institutions are still suffering from limited market access.

BOND MARKETS





During thefirst half of 2012, sovereign bond yields of countries underfinancial stress rose. At the same time, the search for safe and liquid assets caused a decrease in yields in other Member States, deepening the divide in market conditions across euro area countries.

After the announcement on OMTs and announcements by European leaders regarding the banking union, sovereign bond markets rebounded. Sovereign spreads declined, especially in the countries where they had increased the most in the preceding months.

ECB Financial integration in Europe April 2013

9

K E Y M E S S A G E S

10



Corporate bond markets also stabilised during the second half of 2012. Moreover, the market for banks’ long-term debtfinancing was characterised by increasing divergence in issuance patterns between distressed and non-distressed countries, which can be interpreted as a signal of reduced integration.

EQUITY MARKETS



Since the onset of the crisis, equity market performance has revealed a lower degree of cross- country heterogeneity than that of bond markets. However, some stock market divergence was nonetheless observed. Our newly created “segmentation index” showed that this occurred most in countries subject to morefinancial stress, while segmentation in other countries remains around its long-term average.

BANKING MARKETS





The recovery of banking markets is proving to be slower and less vigorous than that of other market segments. A divergence between country groups along the lines already noted can also be observed in banking markets, for instance in the rate of expansion of loans to non- financial corporations. The cross-country standard deviation of bank interest rates on new loans to non-financial corporations remains high.

The regulatory deadline of 1 February 2014 set for completing migration to SEPA constitutes a major push towards the realisation of a more integrated retail payments market in Europe. The full achievement of SEPA represents the main challenge at present, particularly in view of the different speeds of migration in Member States.

ECB Financial integration in Europe April 2013