(Member of the executive board at the ECB) “Globalisation, international financial integration and the financial crisis: The future of European and international financial market regulation and supervision”, speech held on 19 February 2010, www.ecb.org. González-Páramo J.M. (Member of the executive board at the ECB) “Cross-border banking in the EU: developments and emerging policy issues”, speech held on 24 February 2006, www.ecb.org. Helpman E., Melitz M.J. and Yeaple S.R. (2004), “Export vs. FDI with heterogeneous firms”, American Economic Review, vol. 94, pp. 300–316. Heuchemer S. Kleimeier S. and Sander H. (2008), “The Geography of European CrossBorder Banking: The Impact of Cultural and Political Factors”, Maastricht University METEOR Research Memorandum No. RM/08/008. Horstmann I. and Markusen J. (1992), “Endogenous market structures in international trade (natura facit saltum)”, Journal of International Economics vol. 32, pp 109–129. Markusen J.R. and Venables A.J. (1998), “Multinational firms and the new trade theory”, Journal of International Economics, vol 46, pp. 183–203. Markusen J.R. and Venables A.J. (2000), “The theory of endowment, intra-industry and multinational trade”, Journal of International Economics, vol. 52, pp. 209–234. National Bank of Greece, Annual Report 2009, www.nbg.gr. Navaretti G., Calzolari G., Pozzolo A. and Levi M. (2009) “Multinational Banking in Europe: Financial Stability and Regulatory – Implications Lessons from the Financial Crisis”, Centro Studi Luca D’Agliano Development Studies, Working Paper, No. 292. Schoenmaker, D. (2010), “The Financial Trilemma at Work in Europe”, Working Paper, SSRN1340395. The International Monetary Fund, World Economic Outlook Database, April 2010. The Turner Review (March 2009) “A regulatory response to the global banking crisis”, www.fsa.gov.
In my view this is the only reasonable way of dealing with cross-border problems without rolling back financial integration. Recent development of cross-border banking The structure of the financial services industry has gone through major changes over the past decades. Until some twenty years ago, banks were essentially national entities with  1  In terms of lending the Swedish banks’ market shares account for 80 per cent in Estonia, 53 per cent in Latvia and 60 per cent in Lithuania. 2  National Bank of Greece, Annual Report 2009. BIS Review 82/2010  15  most of their activities limited to their home market. Of course, many banks conducted international operations even earlier than this, but those operations primarily focused on wholesale markets and large corporate clients. Smaller companies and consumers have in principle been obliged to use the services offered by domestic banks. Today, banks run businesses across the globe. And through the existence of foreign-based branches and subsidiaries consumers can choose to buy services from banks that are headquartered in a completely different part of the world. The trend towards more cross-border banking is widespread, but much of the development is driven by large financial institutions in a few countries, notably the US, the UK, France, Germany, Japan and the Netherlands. 3 It has become an especially widespread phenomenon in Europe.