-The report of a major research project led by the Institut fur Europaische Politik (IEP) and the Zentrum fur Europaische Wirtschaftsforschung and commissioned by the European Financial Services Round Table (EFR) has been published today. The group made up of Chairmen and Chief Executives from many of Europe's leading banks and insurers. Graham Bishop was member of the advisory board for this report.
The report identifies a range of economic benefits from a single market:
Faster economic growth within Europe. On conservative estimates, closer integration of the European financial services market would create additional economic growth across Europe of at least 0.5% per annum, or euro 43 billion per annum, based on year 2000 figures.
Substantial reductions in industry costs, resulting in lower prices for consumers. For example, potential annual cost savings of euro 5 billion in the European mutual fund industry alone have been identified.
Increased competition, for example forcing lenders to respond more quickly to falling market rates. In an integrated market, it is estimated that households in various countries could have saved between euro 800 and euro 2,500 per annum through lower interest payments on a euro 100.000 mortgage loan in the period 1995-1999.
Better risk/return profiles for investors through diversified Europe-wide portfolios.
Higher acceptance of the Euro, leading to falling liquidity premiums and lower transaction costs.
The report also identifies policy-induced obstacles to the completion of a single market varying according to product type, for example:
Insurance: discriminatory tax practices and national differences in consumer protection.
Internet-based financial retail business: regulatory differences in consumer protection and supervision.
Credit business: limited cross-border access to public credit registers and private credit bureaux.
Funds: Host country responsibility for supervision and tax discriminations hamper the emergence of a unified fund market.
Pension products: new national pension reforms can constitute additional barriers to entry for foreign suppliers.
Pehr Gyllenhammar, the Chairman of the Round Table, said that while great progress had been made in completing the single market in goods and services, the single market for financial services had taken longer - partly because of the careful regulation of the sector by each member state.
”This has a high cost for European consumers, in terms of reduced choice, higher costs and lower economic growth. We cannot afford to continue to move at the slow pace of recent years. Indeed, the successful introduction of the euro will increase consumers interest in buying the best products available anywhere in Europe.”
”Progress on financial services is an important objective for the forthcoming Barcelona summit. We in the financial services industry will play our part in working with the European Commission, the European Parliament and the Council to design and implement the practical reforms required to complete the vision of a single European Market. Planned enlargement makes it even more urgent to complete this task.”
See full text of the EFR report and the supporting academic papers
Se also related FT articles:
Study sees big benefits from single EU market
Bank reform will help jobless, says EU report
Call for open European financial products market
© EFR - European Financial Services Round Table
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article