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Creating and Governing an Integrated Market for Retail Banking Services in Europe

A Conceptual-Empirical Study of the Role of Regulation in Promoting a Single Euro Payments Area

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Matthäus Markus Sielecki

The creation of the Economic and Monetary Union (EMU) has accelerated the harmonization process of regulation and governance in Europe. However, the integration of fragmented retail banking markets still represents a difficult task for regulators. This book investigates the role of EU policy in creating a single market, addressing explicitly questions on the choice of policy measures to overcome barriers to integration persistent in these markets. Based on an analysis of different regulatory theories, the author develops a conceptual framework and illustrates its applicability to the case of the Single Euro Payments Area (SEPA) initiative. The fact that a single market has not yet evolved is less a sign of market or coordination failures than of government failures. The author concludes that, despite the political resistance from national interest groups, regulatory barriers need to be removed first to provide a level playing field for banks and a safe legal environment for consumers.

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F Implications for the territorial dimension of banking regulations 263

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263 F Implications for the territorial dimension of banking regulations The previous chapters have provided the conceptual framework to assess the role of regulations in creating a single market for retail banking in Europe and illustrated the assessment using Regulation 2560/2001 and PSD as an example. Besides this functional view on regulations and the examination of whether reg- ulatory interventions yield a better market outcome than a market driven solu- tion, questions on the design of both policy-making processes and the govern- ance structures of the European retail banking market, and on potential function- al and institutional spillover on other industries arise. By drawing on the devel- opments in the European retail payment market and the creation of a SEPA, this chapter seeks to derive implications for the territorial dimension of banking reg- ulations for integration. 1. Europeanization impacts on policy making processes 1.1 Policy uploading and downloading within the FSAP process Given the economic rational of an integrated financial services sector in the EU and the savings potential in terms of financing and transaction costs, the EU and the member states have stepped up their activities in the pursuit of a single mar- ket with the adoption of the Financial Services Action Plan (FSAP) in May 1999 (European Commission, 1999). The goal of the FSAP was to create an adequate framework for a single European market in financial services, consisting of three overarching objectives: a single wholesale market, an open and secure retail market and adequate prudential rules and...

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