Chapter 4: EU Financial Market Integration Policy
Marica Frangakis INTRODUCTION AND OVERVIEW 4.1 The liberalization of financial markets that followed the collapse of the Bretton Woods agreement soon spread within and across national borders. Industrial countries typically began partial liberalizations in the mid-1970s, pushing such reforms considerably further in the 1980s, so that by the early 1990s financial liberalization was virtually complete. According to Padoa-Schioppa and Saccomanni’s (1994) phrase, for all intents and purposes the shift from a government-led to a market-led international financial system had been accomplished. As a result, striking changes have been taking place in relation to both the intermediation processes and the institutional design across time and space of the financial services sector. In particular, classic banking functionality has been in relative long-term decline more or less worldwide, while disintermediation, financial innovation and expanding global linkages have redirected financial flows through the financial markets. Such financial flow transformation has been especially evident in the USA, while changes in the EU have been less pronounced. The ongoing disintermediation and the faster pace with which US financial structures are evolving – for example by comparison to the EU – have had an impact on global market-share patterns, as US financial firms have come to dominate various intermediation roles in the financial markets. For example, in the early 2000s, over 77 per cent of lead manager positions in wholesale lending, two-thirds of security issuance mandates in global debt and equity originations and almost 80 per cent of advisory mandates (by value of deal) in completed M&A transactions...
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