If a country is to be able to cope with international competition and if capital is to be channelled smoothly within a country, it is of paramount importance for the domestic banking and financial sector to be efficient.
This requires a high degree of financial intermediation, liquid capital markets, the banks having a sufficient capital base, a functioning system of banking and securities supervision and sound payment systems. The financial sector in the accession countries is in need of further development. All in all, the banks have a fairly low level of financial intermediation.