ECB official: Eurozone countries are integrating faster with the US than with each other

European Central Bank Vice President Boris Vujčić said this trend makes the bloc more vulnerable to economic shocks at a time of heightened geopolitical tension.

European Central Bank (ECB) Vice President Boris Vujčić said on Monday that eurozone countries are integrating faster with the United States than with one another. According to him, this process makes the bloc more vulnerable to economic shocks at a time when geopolitical risks are rising.

The statement highlights a contradiction at the heart of the European Union’s long-running effort to build a single capital market. While national borders continue to fragment investment within the bloc, European savings are increasingly flowing to the US.

Citing ECB research, Vujčić said that barriers to cross-border capital investment between the eurozone and the US have fallen by a quarter since 2014. That is more than twice the reduction seen within the eurozone itself.

Speaking at a financial conference in Dublin, the official described the situation as follows: “It is striking that we are integrating faster with the US than with each other.”

Vujčić also pointed to evidence that Europe’s fragmented capital markets make the economy less resilient. According to ECB research, during the COVID-19 shock, companies whose shareholders were mainly domestic investors cut their investment by roughly 20% more than peers with an international investor base.

In addition, unlike US companies, European companies also tend to cut investment when oil prices rise.

“In a fragmented Europe, investment becomes the adjustment margin whenever any shock occurs. This is a resilience problem before it is a growth problem,” Vujčić stressed.