The currency union was consequently expected to foster competition in the banking sector.40 In particular, a reduction in excess capacities and an increase in efficiency was expected.41 A single monetary policy and a single currency could partly take away some of the informational and funding advantage of domestic banks and therefore diminish the need to maintain banking relationships in every country.42 This might lead to a reduction of branches and increased cross-border competition within the euro area.
Whereas there is some evidence that in wholesale and investment banking, a concentration process in under way - even on a European base43 - retail banking seems to be still confined to the national level.