Report

Monitoring European Integration

MEI 9: The Future of European Banking

The European banking industry is in turmoil. The pace of mergers and acquisitions has accelerated and banks that have long been in trouble are disappearing more rapidly. All this happens in 'suspicious' coincidence with the preparations for EMU. Is EMU really driving this acceleration? Where is the industry heading? What risks lie ahead in the transition?

The authors of this report analyse why EU financial markets are so segmented. On the supply side - savings behaviour - is the 'home-bias' of European households. On the demand side - the behaviour of firms - one needs to understand why European corporations stay clear of the bond market and typically borrow from banks. The US experience, particularly the transformation of US banks in the past 15 years, illuminate these phenomena, but a clear understanding of the background issues is essential in predicting the changes that EMU will bring about.

The major policy implication is related to regulation and bank supervision. Risk in the industry is likely to increase both in the transition and in steady state. European countries come to EMU from very different initial positions as far as banks are concerned. In the steady state a more competitive industry will squeeze margins and raise risk. EMU confronts these changes without a clear strategy in the areas of regulation and prudential supervision. The European Central Bank claims that it will not be involved in those activities, which will remain the responsibility of national governments and national central banks. A coordination problem may arise which will make dealing with crises more difficult and possibly riskier.

'This CEPR report is a significant and timely addition to what will be a growing debate in the years immediately ahead.' (David Folkerts-Landau, Deutsche Bank)

Publication file

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Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine (eds) (1999), ‘MEI 9: The Future of European Banking‘, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘What is a Bank Today?‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘The Transformation of the US Banking Industry‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘The European Banking Market(s)‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘Should we Expect a Merger Among ABN-Amro, Deutsche Bank and Crédit Agricole?‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘Asset Management and Investment Banking in EMU: Whose Turf will it be? The Contest Between European Universal Banks and US Inves‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘Competition Policy: European Peers or National Champions?‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘Should Supervision and Regulation be Centralized?‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘European Banking in the Twenty-First Century‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking

Citation

von Thadden, E, F Giavazzi, X Vives and J Danthine, ‘An Agenda for Policy‘, in von Thadden, E, F Giavazzi, X Vives and J Danthine (eds), MEI 9: The Future of European Banking, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/mei-9-future-european-banking