Price- and News-Based Measures of Financial Integration among New EU Member States and the Euro Area

Jan Babecký, Jan Frait (), L. Komárek and Z. Komárková

Chapter 8 in Money, Banking and Financial Markets in Central and Eastern Europe, 2010, pp 161-178 from Palgrave Macmillan

Abstract: Abstract In a monetary union, the integration of financial markets (e.g., money, foreign exchange, bond, and equity markets) plays a key role in assuring the effective transmission of common monetary policy. The importance of conducting an assessment of the degree of financial integration across the euro area member countries is stressed by both central banks and academic institutions — see, among others, Trichet (2008, 2007, 2006, 2005), Papademos (2008a, 2008b), and Yam (2006). The more integrated financial markets are, the more effectively monetary policy is transmitted through the financial system, particularly within the European monetary union. As financial markets expand, their fluctuations have stronger effects on real economic variables such as private consumption. Thus, along with a number of benefits, financial integration brings certain costs. It is widely believed that the benefits outweigh the costs, provided that mechanisms for controlling for financial stability are implemented.1

Keywords: Stock Market; Monetary Policy; Euro Area; Money Market; Market Integration (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-30221-1_8

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DOI: 10.1057/9780230302211_8

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