This paper aims to analyse the change of Europe's financial structure and its driving forces in the context of the European economic integration process, and to provide with some normative discussion on the subject. Since the early eighties, the financial structure of the Continental European countries has experienced a transformation from the classical bank-based system into the one where market plays more important role, similar to the Anglo-Saxon countries. Five phenomena, which are privatization, liberalization of cross-border capital movement, harmonization of market regulations and practices, change in political economic power relationships, and the introduction of the euro, are identified as the main driving forces behind this change. The increasing role of capital markets is expected to result in positive impacts on the construction of knowledge-based economy, as stipulated by 'Lisbon strategy', and dynamic macro-risk management. The same trend has rather unclear impact on the role of financial system in corporate restructuring and the effectiveness of the monetary policy. Finally, it is argued that the Continental European countries, especially the Southern European countries, have to endeavor to strengthen the capital market infrastructure to reap the full benefit of the financial structure change.