4 The conclusion is that greater progress in risk-sharing in the euro area would require significantly more developed and integrated capital markets, as well as more banks operating at a pan-European level. Quantitatively, the risk-sharing benefits of integrated financial markets can be large.
By far the most important source of risk sharing are cross-regional and cross-border asset holdings, that is, various forms of equity holdings and firm ownership claims. Financial integration in Europe was expected to be greatly facilitated by the introduction of the common currency. However, in the years since the introduction of the euro, progress in capital markets and credit markets integration has been uneven.