This paper first provides a broad overview of current conditions in the banking
industry in some of the countries that will participate in European economic
and monetary union. It then goes on to identify a number of important forces
for change. Some of these are global in nature, but likely to have a
particularly strong impact in continental Europe, while others (such as the
introduction of the euro) are distinctively European. The paper then notes just
how little restructuring has actually taken place in continental European
banking in the last decade and offers some explanations. The conclusion reached
is that the banking sector in continental Europe may now be about to enter a
period of sharply increased competition. This will pose challenges for national
regulators and other policy-makers concerned with the maintenance of financial
stability.