Financial Integration Indicators

The integration of Europe’s financial markets is an issue of high importance for the Eurosystem. The ECB has been publishing a set of financial integration indicators since 2005. These indicators span many important dimensions of financial systems and assess the degree of integration in the main financial segments of the euro area, namely money, bond, equity and banking markets. Two broad categories of indicators are considered: price-based indicators and quantity-based indicators. Price-based indicators measure discrepancies in asset prices based on their geographic origin. Quantity-based indicators are used to investigate the extent to which investors have internationalised their portfolios. They usefully complement price-based indicators, as in financially integrated markets investors will increase their holdings of non-domestic assets to fully reap the benefits of international diversification. The set of financial integration indicators is published semi-annually on the ECB’s web site. A fully-fledged ECB Report is published annually, with the aim of documenting and monitoring the progress of financial integration in the euro area.