The Role of the European Banking System in the International Financial Markets

The Scottish moral philosopher, Adam Smith — as economists will know better than I — presented the first complete system of national economics over 200 years ago. His work sheds light on the importance of the institutional framework for individual decision-making processes. Smith’s conclusions are still valid today. What is new is the speed with which the environment in which decisions are made is changing. One field where the change is particularly striking and far-reaching is international financial markets. The role Europe is playing — or can play — in the changing financial markets is the topic of this paper.