Financial integration

When we talk about the degree of financial integration in the euro area, we are looking at the extent to which financial services are available under the same rules and conditions across the region. A well-integrated financial system implies that assets with the same risk-return characteristics have the same prices, irrespective of the country in which they are traded. This contributes to the uniform transmission of the ECB’s monetary policy across the euro area.

How does it affect you?

More advanced financial integration across euro area countries can mean that market participants have greater investment opportunities and are able to diversify financial risks beyond their national borders. Retail bank interest rates are more equal for consumers across borders and businesses may have easier access to money to expand. In sum, financial integration is important because it makes the European economy more efficient by ensuring a single European market for financial services.

What is the ECB’s role?

The ECB and the euro national central banks – the “Eurosystem” – are legally mandated to support financial integration in Europe. This is done by:

  • advising on the legislative and regulatory framework for the financial system
  • acting as a catalyst for private sector activities
  • providing central bank services that foster financial integration
  • carrying out in-depth analysis on the state of financial integration.

The results of these analyses are published every two years in a report on financial integration and structure in the euro area.

Developments in financial integration and structure in the euro area since 2017

The euro area financial system is becoming less dependent on banks and more reliant on other financial intermediaries.

The presence of fintech companies has expanded over the last decade, reflecting increasing competition in and modernisation of the financial system.

Cross-border integration has advanced in the field of large-value payments as banks based in different euro area countries are becoming more interconnected.

Looking for the latest on financial integration?

2 September 2020
Luis de Guindos, Fabio Panetta, Isabel Schnabel: Europe needs a fully fledged capital markets union – now more than ever
Blog post by Luis de Guindos, Vice-President of the ECB, and Fabio Panetta and Isabel Schnabel, Members of the Executive Board of the ECB
3 March 2020
Luis de Guindos: Capital markets union: the role of equity markets and sustainable finance
Contribution by Luis de Guindos, Vice-President of the ECB, on the occasion of the publication of the ECB report on “Financial integration and structure in the euro area”, Frankfurt
3 March 2020
Financial Integration and Structure in the Euro Area, March 2020
3 March 2020
Is the home bias biased? New evidence from the investment fund sector



This special feature analyses euro area investment preferences in the investment fund sector and discusses the implications for financial integration. We investigate the traditional perception that investors tend to hold a disproportionate share of domestic assets in their portfolio, a phenomenon generally known as “home bias”. We argue that measures of home bias that neglect fund holders’ countries of origin are biased, in particular when investments are concentrated in financial centres. By taking into account fund holders’ country of origin rather than assuming the fund’s domicile as investment origin, this study revisits and corrects measures of home bias in the euro area.

Financial Integration and Structure in the Euro Area 2020
3 March 2020
How could a common safe asset contribute to financial stability and financial integration in the banking union?



This special feature discusses how a common sovereign safe asset in the euro area could benefit financial stability by fostering financial integration and development, and by changing the structure of asset markets. The discussion focuses on the potential benefits of a well-designed common safe asset that has certain desirable characteristics, while it does not provide an assessment of specific design options. This special feature should be viewed as part of a broader discussion on how to complete the banking union, which also includes considerations regarding a European deposit insurance scheme and changing the regulatory treatment of sovereign exposures.

Financial Integration and Structure in the Euro Area 2020

View all publications on financial integration