ECB warns that stock markets in the euro area remain fragmented, despite financial progress.

The European Central Bank shows in a new report that financial integration in the euro area has advanced in recent years, but stock markets continue to be fragmented and lag behind the progress made in the banking sector and the bond market.

The ECB states that cross-border investments in equities have fallen to record low levels, affected by structural barriers such as fragmented supervision, different tax systems, and the uneven infrastructure of financial markets.

The institution in Frankfurt believes that these issues limit the ability of European capital markets to support innovation and long-term economic growth. The ECB supports the measures proposed by the European Commission for simplifying taxation, pension reform, and strengthening supervision at the European level, but warns that broader reforms are needed to eliminate national barriers.