Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- List of conference participants
- Foreword
- 1 Introduction
- 2 Banking competition and European integration
- Discussion
- 3 Banking, financial intermediation and corporate finance
- Discussion
- 4 How (not) to integrate the European capital markets
- Discussion
- 5 European financial regulation: a framework for policy analysis
- Discussion
- 6 Corporate mergers in international economic integration
- Discussion
- 7 Capital flight and tax competition: are there viable solutions to both problems?
- Discussion
- 8 Reflections on the fiscal implications of a common currency
- Discussion
- 9 Currency competition and the transition to monetary union: does competition between currencies lead to price level and exchange-rate stability?
- 10 Currency competition and the transition to monetary union: currency competition and the evolution of multi-currency regions
- Discussion of chapters 9 and 10
- 11 Problems of European monetary integration
- Discussion
- Index
Discussion
Published online by Cambridge University Press: 04 August 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- List of conference participants
- Foreword
- 1 Introduction
- 2 Banking competition and European integration
- Discussion
- 3 Banking, financial intermediation and corporate finance
- Discussion
- 4 How (not) to integrate the European capital markets
- Discussion
- 5 European financial regulation: a framework for policy analysis
- Discussion
- 6 Corporate mergers in international economic integration
- Discussion
- 7 Capital flight and tax competition: are there viable solutions to both problems?
- Discussion
- 8 Reflections on the fiscal implications of a common currency
- Discussion
- 9 Currency competition and the transition to monetary union: does competition between currencies lead to price level and exchange-rate stability?
- 10 Currency competition and the transition to monetary union: currency competition and the evolution of multi-currency regions
- Discussion of chapters 9 and 10
- 11 Problems of European monetary integration
- Discussion
- Index
Summary
As the twelve nations of the European Community (EC) advance toward 1992, the forces favouring evolution and integration of financial markets will mount. Ahead of these changes, it is useful to consider the experience of financial markets in the United States and to ask whether any lessons stand out regarding market microstructure and market organization. Yakov Amihud and Haim Mendelson have focussed their attention on several general themes (market centralization versus fragmentation, the creation of liquidity in markets and priority trading rules) and on the specific approach adopted for linking securities markets in the United States, the Intermarket Trading System (ITS). Amihud and Mendelson characterize the ITS as an order-routing system (as distinct from an order-matching system) with several serious deficiencies that make it a poor model for the European Community to follow. The authors present their own proposal that accommodates geographically dispersed financial markets by integrating them via several systems – a portfolio management subsystem, an order execution subsystem (based on a central limit order book), and a clearing and settlement subsystem that utilizes EC-wide clearing and a new mechanism for executing orders simultaneously, the ‘clearing transaction’.
The authors' basic observations about geographically dispersed markets are surely correct. An industrial economy benefits by having efficient capital markets with high liquidity and low spreads. There are gains from market centralization but the centralized market needs a credible competitive threat, in this case from either inside or outside of the EC. And, as for the specifics of the trading system, I completely agree that the ITS is an anachronism that makes poor use of present day technology. Market participants need the freedom to route orders where prices are most favourable.
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- European Financial Integration , pp. 100 - 111Publisher: Cambridge University PressPrint publication year: 1991
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