Financial Integration in the European Union: an Analysis of ECB’s role

The aim of this document is twofold: first, to provide a critical survey of the European Central Bank (ECB hereafter) official documents concerning the process of financial integration in the Euro area; second, to offer an outline of the recent developments in the actual policies adopted by the ECB and by the other European institutions in order to improve that process. To this end, the paper also relies on further sources of literature, such as other institutional papers from other international organizations and several scientific articles. Notice that the most part of considered works are characterized by a clear ‘quantitativist’ and ‘equilibristic’ bias that often prevents their authors to provide a critical reading of the ongoing economic and financial tendencies. One of the main, although preliminary, conclusions is that what ECB’s reports regarded as a process of (nominal) convergence, and hence of increasing integration of Eurozone’s economies, has rather turned into process of real divergence (and hence disintegration), due mainly to national differentials in both unit labour costs of production and income growth rates. In any case, the ‘bank-based’ monetary policies adopted by ECB, coupled with the imposition of national ‘austerity’ fiscal policies, appear to be unable to insure the Euro area against the growing financial instability and the risk of a prolonged economic recession.