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Can European Banks Survive a Unified Currency in a Nationally Segmented Capital Market?

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  • Jan A. Kregel

Abstract

The euro was expected to become a substitute for the U.S. dollar as an international currency. However, compromises made during its creation make it a less than perfect substitute in the medium term. Among these compromises was the application of macro convergence and micro diversity in financial markets and supervision at the national level. This now prevents the creation of a unified capital market and places EU banks at a disadvantage when competing with U.S. banks in global markets. There were also peculiarities in the integration process that led to a single currency in the United States that suggest further institutional changes will be necessary.

Suggested Citation

  • Jan A. Kregel, 2000. "Can European Banks Survive a Unified Currency in a Nationally Segmented Capital Market?," Economics Working Paper Archive wp_305, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_305
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    1. Allen N. Berger & Robert DeYoung & Hesna Genay & Gregory F. Udell, 1999. "Globalization of financial institutions: evidence from cross-border banking performance," Working Paper Series WP-99-25, Federal Reserve Bank of Chicago.
    2. J.A. Kregel, 1993. "Bank Supervision: The Real Hurdle to European Monetary Union," Journal of Economic Issues, Taylor & Francis Journals, vol. 27(2), pages 667-676, June.
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    Cited by:

    1. Mario Tonveronachi, 2014. "The ECB and the Single European Financial Market: A Proposal to Repair Half of a Flawed Design," Economics Public Policy Brief Archive ppb_137, Levy Economics Institute.
    2. Paolo PAESANI, 2003. "Will the Monetary Pillar Stay? A Few Lessons from the UK," Economics Working Papers ECO2003/10, European University Institute.
    3. Patricia S. Pollard, 2001. "The creation of the Euro and the role of the dollar in international markets," Review, Federal Reserve Bank of St. Louis, vol. 83(May), pages 17-36.

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