Introduction

Competitiveness of European financial markets and institutions is a key Single Market goal. This was recently reinforced by Barroso’s refocus on the Lisbon Strategy, where financial services was recognised as an as yet incomplete area of the Single Market. The refocus acknowledges the importance of overcoming the EU’s financial markets segmentation and granting business and consumers direct access to cross-border financial institutions. The Commission concluded that financial services integration warrants further attention and a fresh approach incorporating new instruments beyond further regulation. The Commission recognised that competition policy can make a significant additional contribution in this area.

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Background
Use of competition policy to further financial services integration opportunities should be viewed in the context of the overall integration effort. The introduction of the euro and the opportunity to equip the EU with a modern financial apparatus in which the cost of capital and financial intermediation are kept to a minimum, thereby raising the competitiveness of the single market for financial services and by extension the competitiveness of the European Union, are two key elements.

The quest for increased competitiveness was significantly boosted in 1999 with the launch of the Financial Services Action Plan (FSAP), which set out a clear set of tasks and a timetable for promoting the single market for financial services. The FSAP was widely acclaimed as a success in terms of process, though the implementation of many legislative and other measures has yet to deliver the full effect. The huge progress towards an integrated market in the wholesale area, supported by the introduction of the euro, is clear. We need to recognise: (a) even-handedness in implementation is critical to ensuring fair competition; (b) while regulatory authorities naturally prefer differentiated markets applying the same rules for global competition, it is fundamental to preserve market differentiation to enable "like to compete with like".

The Commission recently issued a Green Paper on Financial Services Policy priorities 2005–10, setting out further aspirations to promote the integration process, though acknowledging the need for a “regulatory pause” and for consolidation of the final measures via implementation and enforcement at national level.