ABSTRACT
This chapter examines the integration process of the different euro area bond and equity markets. It overviews recent development in the government bond market in the euro area, and discusses the degrees of integration achieved in the market distinguishing among different maturity segments. The chapter describes recent developments in the financial infrastructure of bond markets. It shows that a way to measure the degree of government bond market integration is through the analysis of the differences between local and benchmark bond yields within a certain maturity class. The chapter also discusses how equity prices and holdings are influenced by further economic, monetary, and financial integration. It highlights some of the recent developments in the euro area equity markets, and investigates whether the rapid growth has also resulted in better integrated equity markets. The chapter argues that government bond yields have nearly fully converged.
