CHAPTER 1

Understanding the European Financial System

Europe is comprised of a rich diversity of countries; however, one often becomes so familiar with national structures to the point of sometimes wrongly assuming that the reality is similar in the rest of Europe. The characteristics of mortgages and the use of bank accounts can be mentioned as two illustrative examples of the stark differences observed across countries.

In Spain and Ireland, virtually all mortgages are agreed with a rate that is adjusted to market conditions on an annual basis—using the Euribor or official rates as a reference. In countries like Belgium and Germany, however, the majority of mortgages are agreed with the interest rate fixed for as long as 10 years or even for ...

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