The European Central Bank today published its first ever report on indicators of financial integration in the euro area, revealing that money markets are most integrated, followed by bond markets and then equity markets, banking is least integrated.

The report indicates that the degree of integration varies greatly depending on the market segment. The unsecured money market has been fully integrated since shortly after the introduction of the euro.

Government bond markets have integrated considerably. The indicators for the corporate bond market, which has grown significantly since the advent of the single currency, also point to a rather high degree of integration. Progress has also been made in the integration of euro area equity markets, where equity returns are increasingly determined by common factors. However, banking markets are generally much less integrated.

The financial integration indicators will be published semi-annually on the ECB’s website. The report will be updated annually, with the aim of monitoring the progress of financial integration in the euro area.

The ECB says a well-integrated financial system contributes to a smooth and effective implementation of monetary policy throughout the euro area and increases the efficiency of the euro area economy. Moreover, deeper financial integration will contribute to the performance and stability of the financial system.