This chapter deals with the beginnings of World War II in Europe: the revision of the the 1919 Versailles Treaty by Nazi Germany, culminating in the invasion of Poland in September 1939 and the renewal of war with Britain and France. Hitler takes power. Beginning of German rearmament in violation of 1919 Versailles Treaty, including remilitarisation of the Rhineland. Rapid development of the German armed forces (Wehrmacht), including creation of Panzer forces in the army. The Luftwaffe as a powerful threat in the pre-war crises. The French and British armed forces. Mussolini’s invasion of Abyssinia, and strengthening relations with Germany. Russian and American detachment from the pre-war crises. The 1938 Sudeten (Munich) crisis and the partition of Czechoslovakia. Hitler’s plans for war with Poland and the Nazi-Soviet Pact of August 1939. France and Britain declare war. The German invasion, and the rapid overthrow of Poland. The start of war: comparisons between Europe and mainland Asia.

This chapter deals with the peripheral regions of Axis-occupied territory, as opposed to the core of Greater Germany. These regions formed a strategic ‘ring’ to be closed around the Axis, and some Allied leaders hoped that the Nazi regime could be brought down by strategic encirclement rather than by a bloody direct ground assault on the Reich. Unsuccessful Italian offensives against Britain in in Egypt. British naval superiority in the Mediterranean. The German invasion of Greece succeeds despite the dispatch of British troops. Crete abandoned and serious Royal Navy losses suffered. The German Afrika Korps arrives in Libya to bolster the Italian contingent. Value of German central strategic position, fighting on interior lines and with the ability to move ships and aircraft between fronts. Could Hitler have adopted a ‘Mediterranean’ strategy, attacking British external positions rather than Russia? Conflicting objectives among Hitler’s ‘allies’ and collaborators, and resulting weakness of the Third Reich in northwestern Africa. Allied decision to mount indirect Operation TORCH invasion in North Africa in November 1942, rather than a direct landing across the English Channel. Invasion of Sicily and the overthrow of Mussolini in July 1943, followed by Allied landing on mainland Italy in October. Guerrilla war in Yugoslavia. Defection of Romania followed by rapid Russian advance to the west and into Hungary. German evacuation of Greece followed by political crisis in Athens. Norway and Finland as another part of the Axis periphery; the Finns change sides in September 1944.

This chapter starts off by reviewing the three primary functions that financial markets perform. First, financial markets release information to aid the price discovery process. Second, markets provide a platform to trade. The main trading mechanisms, quote-driven and order-driven markets, are discussed. Finally, markets provide an infrastructure to settle trades. The remainder of the chapter provides a detailed description of the main financial markets in the EU (the money, bond, equity, derivatives, and foreign exchange markets).

This chapter begins by defining financial integration and identifying its drivers. Financial integration is a situation without frictions that discriminate between economic agents in their access to – and investment of – capital, particularly on the basis of their location. Market forces as well as collective action and public action drive financial integration. The second part of the chapter describes different methods of measuring the degree of financial integration, and distinguishes between price-based and quantity-based measures. The third part of the chapter gives an overview of the extent to which various financial markets in the EU are integrated. The financial crisis and the euro crisis represent serious setbacks for European financial integration. An important reason why the EU placed the creation of a single financial market and the Capital Markets Union high on the policy agenda is that it widely believed that financial integration would stimulate economic growth. The chapter concludes by discussing this growth effect and other consequences of financial integration.

This chapter discusses the EU’s payment and post-trading (i.e. securities clearing and settlement) systems. Over the past decade, the volume and value of transactions that are processed via these systems have grown tremendously. Stable and efficient payment and post-trading systems have become very important for the operation of financial markets and the economy in general. For a long time, these infrastructures were fragmented along national lines and were exposed to limited competition. But integration is continuing in the context of the single currency, the Single Euro Payments Area and technological innovations. The chapter starts by examining the different elements of (retail and wholesale) payment and post-trading systems. The second part of the chapter gives an overview of the economic features of the payment and securities market infrastructures. The third part of the chapter describes the current situation in the payment and post-trading industry and recent initiatives to promote further integration, and addresses weaknesses exposed by the financial crisis.

This chapter discusses the impact of institutional investors on the functioning of the financial system. Institutional investors are pooling funds and transferring economic resources to different asset classes and countries. They also transfer resources over time, and contribute to price discovery and thereby increase the efficiency of the financial system. In recent decades, the intermediation of financial assets has gradually shifted from banks to institutional investors such as pension funds, insurance companies, and mutual funds. During this process of re-intermediation, the assets of institutional investors of the EU-15 countries quadrupled from 49 per cent of GDP in 1990 to 223 per cent in 2017. This chapter provides an overview of the growth of institutional investors over the last three decades and documents the development of the main types of institutional investors.

This chapter provides a concise overview of European competition policy, with a focus on financial services. The chapter first defines competition and describes the objectives of EU competition policy, i.e. maintaining competitive markets and a single market in the EU. The ultimate goal of competition is to offer consumers a greater choice of products and services at lower prices (i.e. to enhance consumer welfare). The second part of the chapter analyses the economic rationale for competition policy by examining the difference between a perfectly competitive market and a monopoly. The third part of the chapter elaborates on the four tools of EU competition policy. The fourth part of the chapter discusses a framework for investigating the abuse of dominance

This chapter outlines the strengths and background of the major powers before the war, as well as competing political and ideological factors, and the general development of military forces. The largest of the eventual belligerents: Britain, China and Russia, and their different structures. Similar contrasts between medium-sized powers, the United States and Japan. Smaller powers in continental Europe: France, with its empire, Germany, and Italy. Population advantage of Germany within Europe, despite territorial losses after World War I. ‘Satisfied’ and ‘unsatisfied’ powers. Political and ideological factors leading to war. Liberal democracy challenged. Communism as a dynamic force both in Europe and Asia. The radical right, a response partly to Communism and partly to the perceived failings of liberal democracy. Leaders of the radical right, Mussolini in Italy and Hitler in Germany. Nationalist China, Jiang Jieshi, and anti-colonialism. Expectations about the nature of future war. Failure of arms limitation. ‘Total War’ theory and totalitarianism. Developments in armies, including armoured vehicles and mobility. Developments in navies. Independent/strategic and combined-arms use of air-power.

This chapter covers the final stages of Japan’s offensive in the Pacific in the spring of 1942 and the successful Allied counter-attack there, and in Burma, through to the end of 1944. Allied grand strategy: Germany or Japan first? Aircraft carriers replace battleships. The Battle of the Coral Sea as the culminating point of the Japanese Pacific offensive. The Battle of Midway: the decisive defensive naval battle. The US Navy regains the strategic initiative. The counter-offensive towards Rabaul, with Guadalcanal as the first objective. Japanese failure to gain a political or military victory in China. British and American aims and disappointments regarding Jiang Jieshi. The successful Japanese Army ICHI-GŌ offensive in China in April 1944. Overview of China’s role in the war. The important political and military role of British India, including the defeat of the Japanese army at Imphal-Kohima in 1944. American amphibious offensives in the South Pacific and, from early 1944, in the Central Pacific. The decisive offensive Battle of the Philippine Sea and the capture of the Marianas. The successful invasion of the Philippines, following the Battle of Leyte Gulf in October 1944.