The Competitiveness of European Financial Markets

An Economic Framework For Effective Policy-Making

By Gertrude Tumpel-Gugerell

Gertrude Tumpel-Gugerell is a Member of the Executive Board of the European Central Bank. Previously, she was with the Oesterreichische Nationalbank, and she served as Advisor in the Cabinet of theMinister of Finance of Austria. She was Austria’s Alternate Governor of the InternationalMonetary Fund and member of the Economic and Finance Committee. She has published on issues of economic policy, financial stability and regulation. She graduated in economics and social sciences from the University of Vienna (Masters degree with honors in 1975 and PhD in 1981).

The countries that together make up the euro area are undergoing a process of far-reaching change, with established national financial markets merging into one new European market accompanied by deregulation, cross-border consolidation, and increased competition within the euro area. These developments will help to increase longterm economic growth and will have a strong bearing on the international competitiveness of the European financial sector, leading to innovation and modernisation. This paper presents the underlying rationale of financial integration and increased competitiveness of European financial markets and provides a snapshot of where financial integration has been successful and where work is ongoing. It also notes important historical experiences of U.S. financial integration. It concludes by highlighting the role and recent activities of the European Central Bank and the Eurosystem in promoting and enhancing further financial integration.

This paper was originally presented as an address at NABE’s Washington Economic Policy Conference, March 12, 2007.

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