Mr. Frank O'Dwyer:

I have a sense that some of this is behavioural, in an odd way. A number of years ago I heard Lord Turner speak about the early documentation that underpinned the idea of a single currency. That think-talk process in Europe envisaged the idea that a British citizen could walk into a bank in Paris and get a mortgage and that we would all be integrated. However, this did not happen. There is a national approach with regard to investment and capital markets. If within CMU we come up with some form of regulated way or regulated product where SME loans can be pooled and sold, is it likely that a pool of French loans will be sold to French people and Irish loans will be sold to Irish people. Irish investment managers, French banks or German insurance companies, all competing in a CMU, will all be pushing product into their own jurisdictions. I have a sense that maybe that kind of behaviour is a risk. I would love to point to lots of detailed research but it is more a strong sense.

After the banking crisis we saw financial nationalism taking action as every non-domestic bank pulled their assets out of Ireland and other jurisdictions. That kind of thing might also be at play at some level in the capital markets union. It is not a very scientific answer but I have just have a sense that there is some behavioural stuff going on there.