Financial Regulation in Europe: From the Battle of the Systems to a Jacobinist EU
Résumé
This chapter argues that the emergence of a European policy-making state in the area of financial regulation was long successfully resisted by national coalitions, reticent to all forms of internationalisation. This is because finance represents the economy's backbone and, as such, is embedded in long-standing economic traditions that should prove resilient to change. Yet, the integration of financial markets and their corresponding regulation have been considered central to achieving a European single market since at least the 1980s. In this context, the European Commission has used its central legislative position within the EU to gradually move the governance of financial services from the national to the European level. In doing so, the Commission has relied on two complementary dynamics. The first dynamic is the effective internationalisation of capital. As banking and finance progressively internationalised, EU member state governments have had to open up to the Commission's initiatives; otherwise, it was feared that European economies would become increasingly marginalised in global capital markets. The second dynamic occurs when member state governments and economic actors look to Europe for solutions to comparative problems affecting them. Thus, European financial integration and the supranational regulation of financial services represent the best solutions to deal with the challenges posed by the internationalisation of capital. This is, however, an incremental learning process that occurs over time, but once it has begun it becomes difficult to reverse.