2018年-ECB欧洲央行_Financial_integration_in_Europe_May_2018_159页_2mb

Financial Integration in Europe Summary

Core Content

The ECB's 2018 report on financial integration in Europe provides a comprehensive analysis of the progress and challenges in the integration of financial markets within the euro area. It highlights the role of financial integration in promoting economic stability, monetary policy transmission, and cross-border risk sharing.

Key Messages

1. Overall Assessment of Financial Integration

• Price-based integration has resumed strongly since the financial crisis, with a notable increase in 2017 (yellow line in Chart A).
  • This was driven by convergence in equity returns and bond yields.
  • Bank retail interest rates have not contributed significantly to this trend.
• Quantity-based integration has not resumed and has slightly declined since 2015 (blue line in Chart A).
  • The decline is mainly due to a lower share of cross-border interbank lending.
• The resilience of financial integration has improved over time, with equity investments being more resilient than debt, and foreign direct investments more resilient than portfolio equity investments.
• Cross-border risk sharing benefits remain low in the euro area, and there is still room for improvement in financial integration.

2. Selected Policy Issues for Financial Integration

• The ECB has focused on completing the banking union, establishing the capital markets union (CMU), and reviewing the financial supervisory architecture.
  • Progress includes reduced capital risks, leverage, and non-performing loans in euro area banks.
  • Initiatives to establish a common fiscal backstop and a European Deposit Insurance Scheme are recommended to enhance risk sharing.
• AnaCredit data collection is set to begin before the end of the year.
• Liquidity waivers for cross-border banks should be made more attractive and accessible, with the possibility of removing the Member State option for large exposure limits.
• Harmonising insolvency frameworks is crucial for improving the functioning of banking and capital markets unions.
  • Non-binding EU guidelines for out-of-court restructuring and a formal out-of-court regime could help.
  • A general depositor preference and further harmonisation in the treatment of supplementary capital instruments are also recommended.
• Financial literacy and private pension savings are important for developing equity markets and enhancing private financial risk sharing.

Chapter 1: Financial Integration in the Euro Area – Recent Developments

• Financial integration in the euro area advanced modestly in 2017.
• The post-crisis reintegration trend resumed, although the progress was uneven across financial market segments.
• Price-based indicators showed a stronger improvement than quantity-based indicators.
  • The price-based composite indicator increased due to narrower cross-country price and interest rate dispersion.
  • Capital markets, particularly bond and equity markets, showed the most significant improvements.
• Money market integration remained limited, with cross-border transactions still at a low level.
• Cross-border bank lending to retail customers increased slowly compared to interbank lending.
• The sustainability of the price convergence trend remains uncertain due to the slower movement of cross-border volumes.

Special Feature A: Financial Development, Financial Structure and Growth – Evidence from Europe

• Financial development and structure are key to economic growth.
• The financial structure (ratio of equity market capitalisation to bank credit) has a significant impact on growth.
• The ECB's research supports the view that equity markets play a crucial role in fostering innovative growth industries.
• The financial development index (blue line in Chart C) has shown consistent growth since the late 1970s, while the financial structure (red line) has returned to levels similar to the 1990s.
• New initiatives are needed to promote financing of the real economy through public and private equity markets.
• Enhancing financial literacy and private pension savings are recommended to support equity market development.

Special Feature B: Integrating Euro Area Corporate Bond Markets – Benefits and Financial Stability Challenges

• Investment funds, especially UCITS, contribute to quantity-based financial integration by allowing diversification across euro area countries.
• Home bias in investment remains a challenge, with investors preferring domestic assets.
• The increasing reliance on corporate bonds by European firms and the growing participation of households and financial intermediaries in corporate bond markets raise financial stability concerns.
• The report highlights the need to monitor new sources of risk and different transmission channels of financial instability in this context.

Special Feature C: Empirical Assessment of the Feldstein-Horioka Saving-Retention Coefficient

• The Feldstein-Horioka puzzle suggests that financial integration is limited by domestic saving retention.
• The ECB's analysis shows that the saving-retention coefficient has not significantly changed, indicating that financial integration in the euro area remains limited.
• The report discusses theoretical and empirical criticisms of the puzzle and presents a general equilibrium explanation.
• The empirical evidence for the euro area supports the view that financial integration is still limited, especially in terms of capital flows.

Statistical Annex

• The report includes 37 standard indicators of financial integration, including composite indicators and sub-indices.
• Price-based indicators aggregate ten financial market indicators from 1995 to 2017.
• Quantity-based indicators aggregate five indicators from 1999 to 2017.
• The indicators range from 0 (full fragmentation) to 1 (full integration), with increases indicating greater integration.
• Risk sharing indicators are also included to assess the ability of financial integration to smooth cross-country shocks.

Conclusion

The ECB's report underscores the importance of financial integration for the stability and efficiency of the European financial system. While price-based integration has improved, quantity-based integration remains limited. The report calls for continued efforts to enhance capital markets union, banking union, and insolvency frameworks, as well as for the promotion of equity markets and financial literacy to foster private financial risk sharing and economic growth.