Financial integration in the EU: Policy issues and proposals

The integration of financial markets is at present a central policy objective of the EU. The actual policy priorities of the EU in this context have been to accelerate integration and to reduce transactions costs in financial markets. The present paper starts from the view that the minimisation of transactions costs is too narrow an objective in the sphere of financial policy. It seeks to specify other objectives, which should be pursued in the course of financial integration. These objectives include stability, consumer protection and the assertion of the public interest in the financial sector. The paper then links the process of financial integration with other problems in European policy: taxation and the threat of tax competition, changes in corporate governance and pressures on social protection. It is argued that policies for financial integration should be formulated with these connections to other policy fields in mind.