Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- List of conference participants
- Foreword
- 1 Introduction
- 2 Banking competition and European integration
- Discussion
- 3 Banking, financial intermediation and corporate finance
- Discussion
- 4 How (not) to integrate the European capital markets
- Discussion
- 5 European financial regulation: a framework for policy analysis
- Discussion
- 6 Corporate mergers in international economic integration
- Discussion
- 7 Capital flight and tax competition: are there viable solutions to both problems?
- Discussion
- 8 Reflections on the fiscal implications of a common currency
- Discussion
- 9 Currency competition and the transition to monetary union: does competition between currencies lead to price level and exchange-rate stability?
- 10 Currency competition and the transition to monetary union: currency competition and the evolution of multi-currency regions
- Discussion of chapters 9 and 10
- 11 Problems of European monetary integration
- Discussion
- Index
1 - Introduction
Published online by Cambridge University Press: 04 August 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- List of conference participants
- Foreword
- 1 Introduction
- 2 Banking competition and European integration
- Discussion
- 3 Banking, financial intermediation and corporate finance
- Discussion
- 4 How (not) to integrate the European capital markets
- Discussion
- 5 European financial regulation: a framework for policy analysis
- Discussion
- 6 Corporate mergers in international economic integration
- Discussion
- 7 Capital flight and tax competition: are there viable solutions to both problems?
- Discussion
- 8 Reflections on the fiscal implications of a common currency
- Discussion
- 9 Currency competition and the transition to monetary union: does competition between currencies lead to price level and exchange-rate stability?
- 10 Currency competition and the transition to monetary union: currency competition and the evolution of multi-currency regions
- Discussion of chapters 9 and 10
- 11 Problems of European monetary integration
- Discussion
- Index
Summary
Financial market integration
In contrast to goods trade, liberalization of assets trade has not been centre stage in the postwar international arena. Attitudes towards capital account transactions have been influenced by a belief that controls permit countries some independence in setting their macroeconomic policies. Thus, for example, a country could gain full membership of the International Monetary Fund (IMF) by making its currency convertible for current account transactions while at the same time not being required to liberalize capital account transactions. As a result, there were limitations on portfolio and direct investment flows and barriers to the establishment of foreign financial institutions.
Integration of capital markets in Europe has taken a significant leap forward with the Single Act and the endorsement by the Council of Ministers (in Madrid in May 1989) of economic and monetary union (the Delors Report). These call for removal of virtually all barriers to free trade in financial services and the acceptance of rights of establishment of one member country's financial institutions in any other.
There are several factors that have prompted this change. The first is that capital market integration is a natural extension of the economic integration that was set in motion by the Treaty of Rome. This in part had its origins in the belief that economic integration and political harmony went hand in hand and that conflict between states, which has been so much a feature of European history, could at last be eradicated.
The second is that capital market liberalization is a necessary condition for improvements in efficiency in goods and factor markets. Capital market restrictions distort product market behaviour.
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- European Financial Integration , pp. 1 - 8Publisher: Cambridge University PressPrint publication year: 1991
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