specific future developments is impossible to assess with confidence. my own guess is that various patterns will emerge. globally active universal financial service providers will continue to emerge. we should also see the further development of firms specialized in the production of particular components of financial services or in the distribution to end - users of products obtained from specialized providers - - providers that may exist within or outside the traditional financial services industry. i fully expect a large number of efficient and profitable small and medium - sized financial institutions to remain important players in the united states. i would guess this will also be the case in many other nations. in addition, the uncertainties of successful post - merger integration may well favor more use of looser forms of consolidation, such as joint ventures and strategic alliances. monetary policy one of our more important policy concerns in designing the study was the potential effect of financial consolidation on the conduct and effectiveness of monetary policy. the study finds, however, that financial consolidation has not significantly affected the ability of central banks to achieve the objectives of monetary policy. why is this? although the answer is somewhat complex, let me try to explain briefly. as part of our research, we asked central banks in all the study nations about their experiences with consolidation and monetary policy. virtually all reported that they had experienced at most minor effects, and those that had experienced somewhat stronger effects had been able to adjust with little difficulty. a key reason for this finding is that even with the substantial consolidation we have observed, the financial markets important for monetary policy have generally remained highly competitive. even in those nations where consolidation has been considerable, competitive behavior has generally been sustained by the possibility that new firms could enter the markets at relatively low cost. it is also well worth noting that our work suggests that the development of the euro has been particularly helpful in maintaining competition in europe. the euro has encouraged development of european money and capital markets, thus making the number of participants in a particular nation's markets less relevant. consolidation could, at least in theory, affect the way changes in monetary policy are transmitted to the real economy. for example, consolidation could potentially alter the way banks adjust the availability and pricing of credit to their customers as the central bank changes the stance of monetary policy. however, central banks generally indicated that such effects had not been observed. moreover, frequent reviews of the data should allow central banks to take account of any future changes when setting policy. on balance, and despite these quite positive results, our study recommends that central banks should remain alert

segment of the financial services industry within the same country, while domestic mergers involving firms in different segments of the overall financial services industry were the second most common type of transaction. cross - border mergers and acquisitions were less frequent, especially those involving firms in different industry segments. still, all types of mergers and acquisitions, whether within one country or cross - border and whether within one industry segment or across segments, increased in frequency and value during the 1990s. joint ventures and strategic alliances provide an interesting contrast with some of the patterns in outright mergers and acquisitions. as with m & a activity, the number of joint ventures and strategic alliances increased during the 1990s, with especially large increases in the last two years. in the united states, which accounted for nearly half of all joint ventures and strategic alliances, the arrangements were overwhelmingly domestic. however, in the other twelve countries studied, crossborder joint ventures and strategic alliances overall exceeded domestic deals. our research shows that financial consolidation substantially decreased the number of banking firms during the 1990s in almost every nation studied, and measures of the national concentration of the banking industry have tended to rise. still, at the national level, the structure of the banking industry continues to differ greatly, ranging from very unconcentrated in a few nations – the united states and germany – to highly concentrated in about half of the nations in our study. in contrast to banking, there are no consistent patterns across countries in changes in the number of insurance firms or concentration in the insurance industry during the 1990s. within the securities industry, several specific activities, such as certain types of underwriting, are dominated by a small number of leading institutions. it is unclear, however, whether this pattern changed much over the 1990s. one of the most important conclusions of our study is that financial consolidation has helped to create a significant number of large, and in some cases increasingly complex, financial institutions. in addition, these firms increasingly operate across national borders and are subject to a wide range of regulatory regimes. these observations have several important implications that i shall return to in a moment. our work finds that the most important forces encouraging financial consolidation are improvements in information technology, financial deregulation, globalization of financial and nonfinancial markets, and increased shareholder pressure for financial performance. because we expect these forces to continue, we expect financial consolidation to continue as well, even though the pace may be interrupted by swings in the macroeconomic cycle and other factors. the study considers few possible future scenarios but concludes that the likelihood of