Question

Please read Country Focus: Creating a Single European Market in Financial Services on page 260 in the 8th edition and answer the following questions: The European Union’s progress towards creating a single financial market started in 1999. It was to have been completed by 2005, however, progress has been slowed by various factors related to the tradition of each member country operating autonomously. By 2012, significant progress had been made. More than 40 measures designed to create a single market were in place, and others were in the pipeline. The current issue facing the EU revolves around the enforcement of the rules that have been established as law. Some experts believe that it will be at least another decade before the benefits of the new rules become apparent. What are the benefits of creating a single financial market in the European Union for companies? Does it make sense for consumers? What are the impediments to creating a single financial market in the European Union? What does the potential for this type of market mean for countries like Great Britain that have not joined the euro-zone?

Answer 1

In the EU’s single market, which is also called the internal market, where People , Goods , Services , and Money could move as freely as within a single country. In this, Mutual recognition plays a central role in getting rid of barriers to trade. In other words, The citizens of EU can study, live, shop, work and retire in any of the EU country and enjoy the products from all over Europe.

There is no more national barriers :- To create this single market, hundreds of technical, legal and bureaucratic barriers have been abolished to make a free trade. Due to the competition, this leads the companies to expand their operations by bringing down the prices down and giving variety of choices to the consumers :-

• Now, Phone calls in Europe cost just a fraction of what they did 10 years ago.
• Many air fares have fallen significantly and new routes have opened up.
• Many homes and businesses can now choose their electricity and gas suppliers.

At the same time, the EU also ensures that this freedom doesnot underestimate the fairness, consumer protection or environmental sustainability In the Country.

A huge business opportunity :- The single market also attracts the foreign investors. This could also be a great advantage during the time of recession, allowing EU countries to still continue their trading with one another, rather than effecting it because of crisis.

Still some of the barriers remain which are as follows :-

Many obstacles remain, however, in areas where integration is taking longer:

1.fragmented national tax systems

2.separate national markets still exist for financial services, energy and transport

3.e-commerce between EU countries has been slower.

4the services sector is lagging behind the goods markets.

5.Simplied rules should be there on the recognition of vocational qualifications to make it easier for qualified workers to find a job in another EU country.

The financial services market is a special case. The EU seeks to build a strong and secure financial sector. Also to avoid the repeatition of the 2009 crisis, there must be a proper and disciplined supervising financial institutions, regulating complex financial products and requiring banks to hold more capital. Also,there are some which EU IS planning to set up in order to widen its capital markets union by-

1.reducing the fragmentation in financial markets

2.diversifying sources of finance

3.strengthening theflows of capital between EU countries

4.improving the access to finance for businesses, particularly small and medium-sized companies.

The citizens of EU do not need a passport to travel within the Schengen areas, which currently comprises 26 countries:-

1.all EU countries except Bulgaria, Croatia, Cyprus, Ireland, Romania & the UK

2.Iceland, Lichtenstein, Norway & Switzerland

Although Schengen countries no longer carry out checks at internal borders, they have stepped up checks on the EU's external borders-

1.In order to ensure safety in the Schengen area, these countries have also increased police cooperation. The Schengen Information System also allows the police and customs and other national border control authorities to circulate the alerts about the wanted or missing people or stolen vehicles and any documents.