Joining the EU - impact on the financial sector of new member states

Abstract

On May 1, 2004, ten countries will join the European Union. Will the transition proceed smoothly? The main concern related to new countries joining the EU, from the point of view of the financial sector, is what impact the enlargement will have on the functioning of financial markets in new member states. Will competition in financial services increase and place a strain on institutions in accession countries or in the EU as well? Will there be visible impact at all? The new member states consist of eight former transition economies and of Malta and Cyprus. I will focus on developments in the transition countries, and especially in the Czech Republic, which I know best. I will also try to make reference to other accession countries to show that the results of developments over the last thirteen years, at least in the financial sector, are not so different. This brief presentation cannot do more than deliver only a basic description of the past development of financial markets in the transition countries and of their current standing. Hopefully the data from this presentation can serve as background information for those interested in further studies.