86% of euro area bank lending to firms and households was domestic in 2017. And cross-border consolidation, which is one way to increase cross-border lending, has recently reached historic lows.6 More efforts are needed if we want to reap the benefits of an integrated market that helps share risks through the private sector and improve macroeconomic stability in the monetary union.
In the United States for example, retail banking integration has led to a significant increase in the number of multi-state banks. That was not always the case. For example, following the oil price collapse in the mid-1980s, almost every bank in Texas failed, creating a state-wide credit crunch.