Because entry into selected financial services has become possible, it appears that the initial entry cost has been further reduced and the incentive for non-financial business firms to enter the sector further strengthened.
These include higher diversification of risks, which can improve resilience and lead to better risk-sharing across countries. To date, cross-border activity in the banking sector remains fairly limited in the euro area.4 Banking sector integration also matters for the good functioning of the monetary union, as it fosters the smooth transmission of monetary policy throughout the euro area economy.