Financial Market Integration in the US: Lessons for Europe?

Abstract

The introduction of the euro marks a milestone in the integration of financial markets in Europe and is expected to increase capital mobility among the members of Euroland. This paper argues that experience of the United States with financial market integration can potentially serve as a benchmark for the integration effects in Europe. Despite the restrictions to the regional expansion of banks that have prevailed in the US until recently, the degree of financial integration tends to exceed that within Europe. Implications of economic barriers to free capital mobility in Europe for monetary policy and banking supervision are discussed.