Growth and Regional Development in an Enlarged European Union
Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner
Andy Mullineux and Victor Murinde 20.1. INTRODUCTION Any attempt to assess the convergence of the ﬁnancial sectors of ‘accession countries’ on the EU ﬁnancial sector faces an immediate fundamental diﬃculty. This is because the ultimate shape of the EU ﬁnancial sector is itself unknown. The single market in ﬁnancial services is far from complete, since numerous tax and regulatory impediments remain. Further, the full impact of the introduction of the euro in January 1999 has yet to be seen and will of course be greater when (eventually) the UK, and hence ‘The City’ is integrated into a single European ﬁnancial space. The initial impact of the euro was to induce more rapid growth of the corporate bond markets. Other drivers of change include pension privatization. The progressive replacement of ‘pay as you go’ pension schemes with funded schemes will accelerate the development of capital markets in Europe by creating a longterm demand for capital market instruments (bonds and equities). Thus, in assessing convergence, we face a moving target when answering the question ‘convergence on what?’. Financial sector restructuring in the EU member states is progressing at varying paces from historical structures that diﬀer considerably. It is indeed possible that some of the accession countries will prove to be the ‘tortoises’ that arrive at the ultimate structure ahead of some, perhaps even all, of the current member state ‘hares’, whose progress is in ﬁts and starts and who often focus the opposition of vested interest groups. The ‘tortoises’...
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