Joint ABA- EBF Conference Inter-regional Banking Cooperation: Solid Financial Future “Relevance of the Experience of Financial Integration in Europe to the Eurasian Markets” Guido Ravoet, EBF Secretary General Thursday, 27 May Baku, Azerbaijan

EBF MEMBERS 31 national member associations:  27 EU Member States  4 EFTA countries  13 Associates

WHAT WE STAND FOR of sound banking representation We aim to achieve an integrated European financial services market 50 years of sound banking representation We aim to achieve an integrated European financial services market

Definition of financial integration The market for a given set of financial instruments and/or services is fully integrated if all potential market participants with the same relevant characteristics:  face a single set of rules when they decide to deal with those financial instruments and/or services;  have equal access to the above-mentioned set of financial instruments and/or services; and  are treated equally when they are active in the market.

Benefits of financial integration  More opportunities for risk sharing and risk diversification;  Better allocation of capital;  Improved liquidity of markets and strengthened resilience to shocks;  Smooth operation of payment systems;  Enhanced information and competitiveness; and  Potential for higher growth.

Conditions for success To benefit from financial integration, inter alia, two core conditions must be met:  The completion of all segments of financial integration in the region, and  The stability of this financially integrated region.

Steps towards EU financial integration  1960s – removal of restrictions on freedom of establishment and freedom of provision of services;  1987 – Single European Act;  1990 – Economic Monetary Union (freedom of the movement of capital);  1999 – Financial Services Action Plan and introduction of the euro;  2005 – White Paper of Financial Services Policy.

Signs of increasing integration in Europe  Increased transaction volume;  More diversified reserve currency system;  Bond market integration;  Equities market integration; and  Banking sector integration.

Stability and financial supervision  Financial integration and development can increase the efficiency of a financial system, if it is accompanied by adequate legal and regulatory frameworks, corporate governance, market infrastructures, etc.  Financial supervision should assess, in real time:  the build-up of within-market risk,  cross-market contagion, and  linkages between large and complex financial institutions.

Relevance of EU experience for Eurasia  Put sufficient effort into preparation;  Secure joint commitment;  Ensure continuous participation & involvement;  Take into account all regions’ differences;  Monitor integration of various market’ segments;  Secure political stability and sound monetary and fiscal policies.

Per aspera ad astra The path might be challenging –The path might be challenging – the benefits are worth the effort! the benefits are worth the effort!

Thank you for your attention!Thank you for your attention! EBF 50 th Anniversary