This paper is published in Revue trimestrielle de l’association d’économie financière, no. 123, October 2016.
Please note that this paper is only available in French.
- An efficient financial system is essential to the good functioning of the economy. The various functions of the financial system can be provided either by banks or by markets.
- These two sources of funding are complementary and the exact composition between banks and markets is usually not decisive.
- Nevertheless, the European financial system is too strongly bank-based and its markets are underdeveloped. It is absolutely necessary to rebalance it to make it favourable to growth and employment again.
- Developing and integrating European financial markets will allow firms to access a diversified source of funding, adapted to their needs, and increase risk-sharing between European countries to help them absorb shocks.
- The capital markets union is a long-term project, but a series of ambitious reforms and a new institutional architecture could steer the financial system in the right direction.