The Strategic Implications of EMU for European Banking

This paper reviews the broad impact of the European SMP (Single Market Programme) and approach of EMU (European Monetary Union) on European bank strategies. Select but key aspects of the competitive strategies that banks might pursue in this ‘New Europe’ are then considered. Within this review; the key strategic question is explored whether banks necessarily have to be bigger in order to be more efficient and even ultimately to survive in a post-EMU world. It is argued thut efficiency considerations should dominnte over size per se. The strategic perspective that will be developed is to view EMU as the next stage on from the present SMF! This perspective avoids the mistake of visuulising any kind of EMU as likely to precipitate dramatic ‘breaks’ in the present strategic development of European banking. Since the SMP is well advanced, we already have some experience of the strategic reactions of banks towards a single European banking market; this provides a useful indicator of at least some of the broader bank strategic reactions that might be expected to EMU.