Second, financial integration strengthens the stability of the euro area financial system – and of the macro economy in general. Basically, in a well-integrated financial system, risks tend to be more diversified on a cross-border scale which should lead to financial intermediaries, markets and infrastructure becoming more resilient to idiosyncratic shocks.
Having said that, integrated financial markets arguably broaden the scope for spillover effects across borders – as manifested by the recent US subprime crisis. Third, I have already stated that the Eurosystem’s tasks include the smooth operation of payment and settlement systems – which is closely linked to the progress of financial integration.