25 % of the shocks would not be smoothed out. 2 Hence in the United States financial markets and financial institutions would contribute 62 % to the absorption of state idiosyncratic shocks. The effect is very substantially higher than the effect of the federal budget.
We see from the US example that the financial channel can be much more important than the fiscal channel and that is a particularly important additional reason to speed up financial integration in Europe. Financial integration is also very important for stimulating economic growth in Europe via its impact on the development of the European financial system.