This picture of a comparatively low degree of integration is also borne out by the level of banks’ cross-border retail lending activity within the euro area, which, while increasing slightly from around 2% at the end of 1997 to around 3.5% today, remains low. Let me now make a few brief comments on an important retail market, namely the European mortgage market.
In addition to financial sanctions, political and reputational measures would help foster early compliance, as would the application of earlier and more gradual financial sanctions within the macroeconomic surveillance framework. Discretion to reduce or suspend financial sanctions is undesirable as it strongly reduces effectiveness and sets the wrong incentives. Third, more ambitious policy requirements would better match the current reality of the euro area.