FRANKFURT, April 28 (Reuters) - Differences between financial markets in Europe are still greater than before the financial crisis, despite unprecedented measures for closer integration, the European Central Bank and European Commission said on Monday.
The ECB's government bond purchase programme, dubbed Outright Monetary Transactions (OMT), soothed concerns the euro zone might break apart, and new mechanisms for joint banking supervision and resolution helped to improve the situation. But more needed to be done, the EU's executive and the ECB said.
"A return to higher levels of financial integration cannot be taken for granted and requires sustained policy actions in the short term, especially the effective implementation of the banking union and, at the national level, carrying on with structural reforms," said ECB Vice President Vitor Constancio.
More needed to be done, for example, in the corporate bond, equity and banking markets, the two institutions said when presenting their annual reports on financial integration.
There were still strong divergences of bank lending rates across euro zone countries, the ECB said, in particular for small and mid-sized companies, which form a cornerstone of the economy.
"Looking ahead, the ECB will continue to investigate how to catalyse recent initiatives by European institutions to improve funding conditions for SMEs (in particular as regards the possible acceptance of SME-linked ABS guaranteed mezzanine tranches as Eurosystem collateral, in line with established guarantee policies)," the ECB said in its report.
The ECB's new Synthetic Indicator of Financial Integration (SYNFINT), which tracks the overall level of financial integration over time, reflecting developments in money, bond, equities and banking markets, showed that the recovery was slow.
The 2008-2009 financial crisis pushed fragmentation to levels similar to those seen before the euro was introduced. (Reporting by Eva Taylor; Editing by John Stonestreet)