Edited by James R. Barth, Chen Lin and Clas Wihlborg
Francesca Arnaboldi and Barbara Casu* 31.1 INTRODUCTION Since the signing of the Treaties of Rome in 1957, the European Union (EU) has grown to a union of 27 member states and a population of nearly half a billion citizens. Nowadays, the EU is the largest integrated economic area in the world, accounting for more than 20 per cent of the world’s GDP.1 The financial sector has played a key role in the process of EU economic growth. Since the introduction of the First Banking Directive in 1977 (77/780/EEC), the deregulation of financial services, the establishment of the Economic and Monetary Union and the introduction of the euro have helped to create the Single Market for financial services. European authorities consider financial integration one of the key issues for making Europe more efficient and competitive and, ultimately, for contributing to sustainable economic growth (ECB, 2005). Indeed, EU financial integration has brought with it a range of benefits, from increased income generation to improvements in technology and risk management, increased access to funds, risk diversification and deepening of financial markets.2 Despite the positive achievements, critics argue that the Single Market can never operate properly across an area with such different cultures and levels of wealth. Whether it is a question of North to South or East to West, there seem to be identifiable cultural fault lines across the European continent. There are, of course, common values and some European common culture, but definitions are complex.3 It is therefore apparent that, even with...
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