EMU — The issues for banks

The private sector on the whole has contributed relatively little to the analysis and public discussion of the European Monetary Union (EMU), one exception being the financial sector, banks in particular. Its special interest can hardly be explained just by the size of its share in total value added in Europe, which is roughly 7% — not that large. It is rather that banks are affected by practically all kinds of economic activity. Thus their performance is significantly related to the development of macroeconomic aggregates. The implementation of EMU is probably the most demanding structural change banks have to digest by the end of this decade. While EMU promises a range of advantages to the non-financial sector, none of them is certain for banks and some are directly to their detriment.