Introduction

Most retail financial services in the European Community (EC) have for a long time been characterised by a low degree of cross-border penetration and competition. This market fragmentation stemmed partly from government regulations obstructing free movement of capital, freedom of establishment and provision of services in the EC. Not surprisingly, therefore, the 1988 ‘Cecchini report’, the large-scale economic study on the costs of market barriers between the EC countries, concluded that in the European financial services sector “… market openness, competition and low cost-efficiency is often deliberately not assured”.