In light of these developments, one question that is worth contemplating is whether there is such a thing as an optimal degree of financial integration? Can there be too much of it? The experience of the financial crisis shows that at least some forms of financial integration didn’t go too well. Relatedly, what is the most beneficial form of financial integration?
Is it cross-border banking flows? And if so, should those flows be through a branch or a subsidiary, taking account of the varying regulatory environments that come with that choice? Are bank to bank flows more problematic than direct lending by foreign banks to domestic borrowers? The experience of cross-border banking is also replete with examples of the last-mover disadvantage.