Spain is reportedly pushing the European Union to remove obstacles that deter cross-border mergers of retail lenders.
Alvaro Nadal, chief economic adviser to Spanish prime minister Mariano Rajoy, has urged the European Commission to stop national regulators from hindering tie-ups that strengthen the financial links between euro member states.
Nadal in an interview to Bloomberg said: "One of the problems with monetary union is the lack of risk sharing across the system. Imagine if half of Spanish mortgages had been provided by German banks, the crisis would have been very different."
According to him, Europe’s financial system will be resilient to shocks if retail banking industry follows the path of the telecommunications industry which has seen a wave of consolidation since EU action facilitated deals.
Nadal added: "A lot of effort has been made to restructure the banking system and we are also seeing improvements in the European debt markets. Now we should be thinking about the need for more integration in retail banking."