Integration of Financial Services in the European Community: Lessons from the Experience in the United States

Abstract

The plans for European integration by 1992 are ambitious ones. They include the removal of remaining internal tariff and nontariff barriers to trade for commodities and services and the extension within the Community of the nondiscriminatory treatment of each nation’s enterprises (Cecchini, 1988; Colchester, 1989; Bhatt, 1989; Pinder, 1986; Nicoll, 1985; Capotorti et al., 1986; Brewin and McAllister, 1987; Langeheine and Weinstock, 1985). Within the general plans are more specific ones for the integration and harmonization of financial services according to objectives announced at the June 1989 meeting of the heads of the EC states in Madrid. These plans relate to various aspects of securities markets — the underwriting and marketing of new issues, the securities exchanges, markets for unlisted securities, securitization of the assets of financial intermediaries and venture capital markets (Colchester, 1989; Bhatt, 1989; The Economist, (1988a, 1988b); Lopez-Charos, 1987; Tully, 1988; Winder, 1986; Gordon, 1987). The plans call as well for the harmonization of insurance regulations, including those governing ties between insurance and other financial services. And, of course, the plans relate to commercial banking or, more generally, to deposit-type financial intermediaries (Key, 1989; Padoa-Schioppa, 1988). Here the topics range from the possible creation of a European central bank (de Cecco et a1., 1989) through the harmonizing of prudential and protective regulations, to deposit guarantees and other schemes for assuring the stability of credit.