Capital Market Integration

Capital market integration is one of the most important aspects of the global capital market. Capital market integration has a significant impact on the global economic growth. Recently, the European Union and the United States have taken a strong commitment towards capital market integration.

Capital market integration plays a significant role in the field of international financial economics because capital market integration deals with a number of issues associated with integration of markets, implementation of policies, and the handling of crisis resulting from integration.

The United States and European Union have concurred that higher level of cooperation in the capital market sector is the path to encourage the economy of transatlantic financial services. A summit was held on 20th June, 2005 in Washington and there it was decided by the US and EU leaders to put the focus on capital market integration. In this process, they will continue to include a comprehensive variety of economic participants for reducing regulatory hurdles, as well as getting rid of commercial and investment hindrances.

The steps which will be formulated include the following:

Combating money laundering and corporate fraudulence
Formation of a high-tier regulatory co-operation forum
Additional co-ordinating implementation of competition legislations
Growth of capital market integration and this will involve:

1. Concurrence of accounting standards;
2. Consolidation of settlement and clearing systems;
3. Approval and enforcement of Basel II;
4. Formation of transatlantic venture capital market;

The principal objective behind capital market integration is minimization of cost by increasing the compatibility of financial regulatory systems of the European Union and the United States.