The countries that together make up the euro area are undergoing a process of far-reaching change, with established national financial markets merging into one new European market accompanied by deregulation, cross-border consolidation, and increased competition within the euro area. These developments will help to increase longterm economic growth and will have a strong bearing on the international competitiveness of the European financial sector, leading to innovation and modernisation. This paper presents the underlying rationale of financial integration and increased competitiveness of European financial markets and provides a snapshot of where financial integration has been successful and where work is ongoing. It also notes important historical experiences of U.S. financial integration. It concludes by highlighting the role and recent activities of the European Central Bank and the Eurosystem in promoting and enhancing further financial integration.