The liberalization of international trade in financial services is a significant component of global and regional economic cooperation. Modern economies depend on well-functioning financial markets and financial markets benefit from the flow of financial services across borders. Financial institutions may engage in transactions with non-residents either directly from their headquarters or by establishing branches and subsidiaries overseas. This book focuses on services provided via the Internet by commercial banks (or ‘credit institutions’ in the EC terminology) and explores the potential contribution of electronic finance to meeting the objectives of financial integration in the single European market.

The notion of ‘financial services’ essentially refers to the full array of functions performed by financial institutions, including but not limited to the acceptance of deposits, lending, payment services, securities underwriting and trading, asset management, financial advice, settlement and clearing services. In conducting these activities with non-residents, a financial institution engages in international trade in financial services. The modes of providing financial services across borders are basically four: first, the financial institution remains outside the territory of the client and the client remains inside his territory of residence and the service is supplied with the help of information and telecommunications technology (cross-border services). Second, the client physically moves from his country and receives the service in the location of the financial institution (consumption abroad). Third, the financial institution supplies the service to non-residents through a foreign affiliate, branch or subsidiary located in the country of the client (commercial presence).