European monetary integration not yet complete
Europe still has not yet reached full monetary integration. The European Economic and Monetary Union (EMU), which was introduced ten years ago, has not met all expectations, shows PhD research of economist Mary Pieterse-Bloem.
Pieterse-Bloem studied the monetary integration of Europe by following the behavior of investors in European bond markets. Her data collection covered a period of nearly twenty years (1990-2008). Apparently, the predicted effects of EMU did not all come true.
One expectation was that the differences between the participating countries would be reduced due to financial and economic integration. The contrast between southern and northern Europe was predicted to decrease. In addition, a form of industrial specialization was predicted. Pieterse-Bloem’s findings contradict both expectations.
Furthermore, the study shows that the importance of liquidity and term effects did decline as predicted. The European bond market has indeed become a larger and deeper market. [TvN/transl.YV]