Banking & financial markets after the euro - 28.11.2000

EIB's contribution to the conference on The Euro and Social Banking of 23/11/2000
     

The introduction of the euro on 1 January 1999 has already had a visible impact on the way financial markets and the banking sectors in Europe are operating. While the euro is certainly playing a catalytic (i.e., accelerator) role in this respect, it is best seen as an additional force that adds to long-running structural elements that are leading to a financial landscape that differs a lot from what we have known for several decades. The discussion is organised around three key themes.

* Capital markets are rising to pro-eminence in of financial intermediation. The shift toward a more institutionalised management of savings and the development of the capital market seem unstoppable.

* The banking sector is undergoing a tremendous restructuring. This is not just limited to the domestic and cross-border merger and acquisitions operations that are taking place in Europe, but goes much deeper. The way banks operate and the type of business they engage into is changing rapidly. For decades the banking system has been (and still is) heavily regulated. But the emergence of less regulated competitors and more demanding capital regulation for banks are shifting the activities of banks away from traditional intermediation.

* Ageing in most developed countries raises the issue of the sustainability of the current pension arrangements.
The financial constellation that is likely to emerge from these changes is one where the financial needs of most of the population could be better serviced but the populations suffering most from information asymmetries and credit rationing are likely to see their situation worsen.
            Eric Perée, Advisor, Chief Economist's Department European Investment Bank