Effective financial integration in essential to make Europe stronger and the European Central Bank (ECB) is committed to making it happen, at a time when the fragmentation of the financial market has led to the improper transmission of the monetary policy, ECB President Mario Draghi said Tuesday.
The impact of widespread fragmentation in the single financial market has resulted in the uneven transmission of the central bank's interest rate reductions to firms and households across the Eurozone, the policymaker said at a conference on financial market integration.
"Financial integration leads to better risk-sharing and diversification, it makes markets deeper and more liquid, and it encourages competition, which in turn reduces the costs of intermediation," Draghi said.
"In addition, financial integration fosters more efficient allocation of capital, higher productivity, and stronger and more sustainable non-inflationary economic growth."
The ECB has had to identify the most effective policy tools for repairing the disruptive effects of the severe fragmentation of the single financial market.
Draghi said he hoped all stakeholders shared the same goal of making Europe stronger and more attractive for both domestic and foreign investment, thus stimulating and sustaining growth.
Last month, the ECB chief had said that the main priority of the central bank was to enhance the transmission of its monetary policy across the euro area.
by RTT Staff Writer
For comments and feedback: email@example.com
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.