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After the 2008 financial crisis, international policy reforms were adopted on various aspects of derivatives markets, highlighting the need for precise and consistent rules. We examine the making of international rules concerning the resilience, recovery and resolution of central counterparties (CCPs), which form acritical global financial infrastructure. We argue that regulators played an important role in setting relatively precise and consistent international standards on CCPs over time. Facing common challenges, such as market fragmentation and interlinkages between issues, fostered a problem-solving approach in transgovernmental networks. We also identify the policy coordination tools used by regulators.

This policy brief presents the outcomes of a roundtable event organised by Studio Europa Maastricht and European Institute of Public Administation (EIPA) in April 2022. The event was organised in collaboration with the Maastricht Centre for Citizenship, Migration and Development (MACIMIDE) and Centre for European Research in Maastricht (CERiM) of Maastricht University, and United Nations University – MERIT. In two panel discussions, academics from various disciplines reflected on the recommendations adopted by the European Citizens’ Panel in Maastricht, which was held in Maastricht in February 2022 in the framework of the CoFoE. EIPA and Studio Europa Maastricht, as CoFoE host institutions, were closely involved in the organisation of the citizens’ panel.

International regime complexity has become a prominent feature of the global economy and world politics. The international governance of derivatives markets is a notable case of this phenomenon in finance because a variety of post-crisis rules have been issued by a multitude of international standard-setting bodies. By combining the regime complexity and orchestration frameworks, we explain the precision and scope of international standards for derivatives trade reporting. We show how a collective orchestrator (the Group of Twenty) and a hub intermediary (the Financial Stability Board) managed regime complexity through the orchestration of the available intermediaries. We also seek to refine the orchestration framework by explaining how the mechanism of issue de-linkage can be used to manage the partly diverging goals among states within the collective orchestrator. Our findings are relevant for the global regulation and governance of other policy areas characterised by a multiplicity of actors and interlinked issues, such as trade, energy, and environmental policy.

The European single market has been a flagship achievement of the European integration process. Nevertheless, 30 years after the launch of the single market, there are still instances of technical, legal, and bureaucratic obstacles to trade. In some areas of the single market, the EU has recently launched important new integration initiatives. At the same time, EU-wide crises have exacerbated already existing regulatory challenges, such as the development of common standards to ensure the interoperability of the underlying financial, IT, energy grid, and defence infrastructures. The introduction to this special issue puts forward two overarching hypotheses to examine how hybrid governance arrangements in the single market architecture have affected the dynamics of integration in a range of key areas, such as banking, digital single market, energy, defence, transportation, the network industries, and higher education. We distinguish between and analyse three different outcomes: renationalisation, renewed integration, and resilience.

Established at the height of the Eurozone sovereign debt crisis, the intergovernmental European Stability Mechanism (ESM) has, potentially, considerable influence over decisions on the provision of loans to Eurozone member state governments and on the recapitalization of banks. Legally and organizationally, the ESM is an international financial institution and thus its accountability can be compared to that of the International Monetary Fund (IMF) and other international financial institutions. However, the ESM’s governance structure and decision-making procedures show that it is deeply embedded in the Eurozone governance architecture, resulting in a ‘dual institutional embeddedness’. Focusing on vertical and horizontal accountability, combined with a learning perspective on accountability, this paper presents an assessment of the accountability mechanisms applicable to the idiosyncratic ESM and how these mechanisms work in practice.

Before the covid-19 pandemic, significant advances have been made in the advanced industrialized economies toward greater gender equality in the workplace, especially since the 1990s. However, the first year of the pandemic has led to dramatic backsliding in gender equality even among countries that have adopted sizeable relief packages to combat the devastating economic effects of the pandemic. This commentary argues that the pandemic has reinforced existing vulnerabilities in IPE. The essay takes stock of government economic support measures in selected OECD economies. It then compares the government responses in two representative cases with very different welfare state legacies—Denmark as a case representative of the Nordic welfare state model and the USA as a case representative of the liberal welfare state model. The main finding is that the Nordic welfare state model has been more successful in protecting vulnerable social groups, such as women, in times of severe crisis. The contrast is especially visible if we compare the performance of Denmark in terms of maintaining female labor force participation during the pandemic with that of the USA, where women as a social group have been set back decades in terms of exit from the formal labor market as well as loss of job and career opportunities.

Post-crisis international standards have been agreed on in certain areas of banking regulation, namely capital, liquidity, and resolution, but not others, namely bank structure – why? We articulate a two-step analytical framework that links the domestic and international levels of governance. In particular, we focus on the role of domestic regulators at the interface between the two levels. At the domestic level, regulators evaluate externalities and adjustment costs before engaging in cooperation at the international level. This analysis explains why regulators in the United States and the European Union act as pacesetters, foot-draggers, or fence-sitters in international standard setting; that is to say, why they promote, resist, or are neutral toward international financial standards. At the international level, we explain the outcome of international standard setting by considering the interaction of pacesetters and foot-draggers.

This special issue aims to examine whether there is an enduring politicization inthe European Union (EU) “Better Regulation” agenda despite the emphasis on neutral evidence-based policy making. Our article addresses this overarching research question by focusing on the use of stakeholder consultations in the case of financial sector governance, particularly, the amended Markets in Financial Instruments Directive (MiFID II). We show that calibrating key provisions in MiFID II, such as those concerning knowledge and expertise, is not a simple exercise in rational problem definition and policy design. The provisions examined in this article have important repercussions for financial sector firms’ business strategies and operations. Thus, investment firms, banks, training institutes and public organizations have mobilized and actively sought to assert their views on the appropriate requirements for professional knowledge and experience in MiFID II. We found that, following the stakeholder consultation, the European Securities and Markets Authority (ESMA) opted for a minimum harmonization approach at the EU level. At the same time, ESMA also supported giving the respective national competent authorities sufficient remit to issue additional requirements in accordance with national laws and regulatory practices. Our article demonstrates that while public consultations provide rich evidence for the policy making process, they also contribute to the lasting politicization of regulatory decisions.

In the aftermath of the international financial crisis, the European Union (EU) adopted a series of regulatory reforms concerning capital adequacy, bank structures and resolution in order to tackle the risks created by financial institutions that were ‘too big to fail’. This article demonstrates different degrees of progress towards a supranational framework in two important areas of reform: Limited harmonization of the rules on bank structures, but robust progress toward the supranationalization of bank resolution, where the euro area dimension is also considered. What accounts for this variation? We draw on a synthesis of neofunctionalism and liberal intergovernmentalism to explain the diverging outcomes. We explain the low supranationalization in bank structural reforms with the absence of strong spillovers and availability of domestic options to unilaterally contain financial instability. In bank resolution, we examine the causal mechanisms through which significant spillovers modified the government preferences of key Member States.

This article examines banking structural reforms introduced in the European Union (EU), placed in an international context. The concept of ‘regulatory cascading’ is put forward to investigate how European policy-makers tackle complex multi-faceted problems, such as that of banks which are ‘too big to fail’. The article shows that partial solutions to the problem introduced in other areas of banking regulation, coupled with strategic activism at the domestic level by key EU member states have constrained the opportunities to design a coherent EU framework regulating bank structures. In response to the Commission's proposal for harmonised European banking structural reforms, the Council has stressed in its position two approaches that closely correspond to the measures adopted in France and Germany, on the one hand, and the UK, on the other hand.

Swedish decision-makers opted out of the European banking union (EBU) despite the large cross-border presence of Swedish banks in Estonia, Latvia, and Lithuania. The three Baltic states, on the other hand, have already joined the eurozone and are part of the EBU. This article identifies three important domestic considerations that have shaped Sweden's position. Firstly, Swedish decision-makers were concerned that member states outside the eurozone would not fully participate in EBU decision-making. Secondly, they were reluctant to pay for the recapitalisation or resolution of distressed non-Swedish banks in other EU countries. Thirdly, Sweden preferred to retain regulatory autonomy in crisis management. The article relates Sweden's position to the overall cautious approach of other non-eurozone members such as the UK and Denmark. Nevertheless, it highlights the enhanced role of the European Central Bank (ECB) in banking supervision not only for eurozone insiders such as Estonia, Latvia, and Lithuania but also for member states outside the Eurozone such as Sweden.

After the international financial crisis, new financial regulations were adopted at the international, regional (EU) and national levels. The timing, the sequencing and the interaction of reforms at different levels followed distinct patterns, which had implications for the design and the coherence of the rules. Despite the proliferation of new and amended international standards in finance, there are no formal mechanisms in the EU to ensure regulatory coherence in the multi-level, multi-venue regulatory dynamics observed in this sector. To shed light on this issue, we investigate the setting of rules on loss absorbing capacity (LAC) for banks, which is one of the main recent areas of post-crisis reform. We expect that regulators will play a key role in the quest for coherence in finance. The central hypothesis investigated in this paper is that they are better able to secure regulatory coherence when they have considerable rule-making competences.

Originating from a networked committee of national supervisory authorities with limited decision-making powers, the European Securities and Markets Authority (ESMA) has become a prominent regulator in European financial sector governance since 2008. It is the single supervisor of credit rating agencies and trade repositories operating in the EU and has recently exercised its new powers to impose fines on firms violating the EU rules. ESMA has both decision-making and information gathering powers. It decides upon important binding technical standards in securities trading and plays a crucial role in the harmonisation of national practices across the EU through issuing guidelines, disseminating best practices and conducting peer reviews. What explains this unparalleled transfer of powers to the supranational level in European financial sector governance? This paper argues that the succession of crises affecting the EU’s financial and economic order since 2008 created a momentum for centralisation of governance, operationalised in terms of the creation of new EU bodies and transfer of powers and competences from the member states to the EU level. Furthermore, as a consequence of a series of EU legislative reforms since 2011, ESMA has received new responsibilities and powers to ensure harmonised rule application across the EU.

For quite some time parliaments were seen as the losers of European integration. As a reaction, several parliaments have sought to exert more control over the executive branch in EU decision-making. An alternative venue for 'clawing back' these lost powers is by influencing the domestic transposition of EU policies. Surprisingly, this opportunity for greater parliamentary involvement has not received much scholarly attention. Under what conditions do the parties in parliament engage in ex post scrutiny over transposition? To shed light on this question, this article provides a detailed study of scrutiny by the Dutch parliament over the transposition of two social policy directives, investigating four hypotheses regarding vote-seeking, policy-seeking and office-seeking incentives for parliamentary oversight. The analysis shows that the ex post scrutiny that takes place can mostly be summarised as low-profile scrutiny aimed at information-gathering and position-taking, especially by opposition parties.

What is the optimal scope of regulatory harmonization in European financial sector governance? I argue that the levels of foreign ownership and domestic bank internationalization are important determinants of the extent to which governments are prepared to endorse European solutions in banking supervision or prefer national ones. I test two hypotheses about the impact of foreign ownership and domestic bank internationalization on regulatory preferences. This article shows that being a host jurisdiction to foreign financial institutions constrains states’ ability to steer credit flows and tackle perceived threats to national financial stability. As a consequence, decision-makers seek to preserve some national regulatory autonomy. Especially during economic downturns, national supervisory authorities have strong incentives to pursue policies that minimize losses for domestic stakeholders and shift burdens onto foreign ones.

This article examines banks' positions on the 2014 proposals for EU banking structural reforms. Centralization of authority in banking regulation and supervision has been a legislative priority in the European Union (EU) since 2008 in order to address regulatory shortcomings in the aftermath of the global finanical crisis. European decision makers have introduced more stringent capital adequacy requirements and transferred greater powers to the European Supervisory Authorites. In 2014, the European Commission put forward a proposal for banking structural reforms comprised of two elements: a ban on proprietary trading and mandatory separation of some trading activities from the deposit-taking entity. We refer to 'regulatory cascading' in order to conceptualize the rapid and successive introduction of legislative packages designed to fix problems and gaps in the EU banking regulatory framework. Our analysis shows that the majority of European banks and financial services associations are opposed to further banking structural reforms at the EU level. We find evidence that banks domiciled in member states that have already passed reforms prefer those over EU alternatives. Large internationalized banks are most opposed to further EU banking structural reforms.

This article investigates the most important determinants of domestic institutional change in combating corruption and reforming the judiciary in Bulgaria and Romania since EU accession in 2007. It explores how EU and domestic incentives trigger domestic institutional change, and how the two interact with one another. It argues that political leaders and parties will only continue and deepen reforms in response to the twin forces of EU and domestic influence. The EU incentives that shape elite choices stem primarily from public monitoring by the European Commission of government performance and the possibility of sanctions by the EU. The domestic incentives centre on winning elections and holding power, with substantial variation explained in part by diverging sources of domestic support.

The changes in the European financial architecture in the aftermath of the 2008 global financial crisis have highlighted the tension between the need for greater centralization of financial regulation at the EU level and the reluctance of some Member States to give up national regulatory autonomy. This article analyses the attitudes of new EU Member States toward the EU financial regulatory reforms. It investigates whether the extent of foreign ownership in the domestic financial sector, Euroscepticism, government support for deregulation and recent experiences of a severe financial crisis have an impact on countries' reservations. According to the results of the analysis, the higher the foreign ownership of a country's financial sector, the more reservations it expresses. The Eurosceptic attitude of the political parties in government matters as well. The more the governing political parties are opposed to EU integration in general, the more reservations one finds in a country's official position on the new EU financial architecture.

recent bank collapses as a result of the global financial crisis have highlighted the need to keep international bank supervision practices up to date with technological and product innovations in the sector. In the 1980s, coordination in international financial regulation resulted from multilateral negotiations in which states played a central role. Since then, international banking regulation has undergone significant transformation. This article probes the explanatory power of multi-level governance in the case of european bank regulation. According to the first proposition examined here, experts play an essential role in policy formulation. The second proposition stipulates that public, private and international actors participate in decision-making and shape the regulatory outcomes together with national regulators. The third proposition states that independent regulatory agencies, rather than government ministries, implement regulations and monitor compliance. The analysis is based on evidence from two new eu member states, bulgaria and hungary, that are representative of the two most common types of bank supervision organizational structure in the eu.

This article analyzes the political processes that have shaped legal reform of the banking sector in the post-communist region. The article identifies two patterns of reform and examines hungary and bulgaria as examples of each pattern. The strategy for changing banking sector legislation and its implementation in hungary has been ‘reforming for the market,’ whereas the prevailing strategy in bulgaria until 1997 was ‘reforming for our friends.’ after 1997, bulgarian governments switched to ‘reforming for the market.’ i argue that this shift took place because of an important partisan change of the governing elites that reinforced the role of international actors and altered the elites’ relationship with important domestic stakeholders. The article shows that front-runners of banking reform in the region such as hungary introduced significant private ownership in the sector and, at the same time, the governing elites enhanced the state's regulatory capacity. By contrast, ‘partial reform’ regimes such as bulgaria until 1997 undertook limited and selective ownership change and the governing elites weakened the state's regulatory capacity, thus giving a boost to the already existing clientelism.

Chapter 2 examines the economic reform path and bank privatization variables in my analysis. I reconstruct the path of banking sector reform in the four cases since the early 1990s. In particular, I discuss the timing of banking sector privatization and the extent to which foreign banks were allowed to enter the domestic market. We will return to these independent variables in Chapter 4, which analyzes the most important determinants of banking sector regulatory approach during the period of rapid credit growth in the region, 2000–2008.

During the period 2000–2007, Central and Eastern Europe was among the fastest growing regions in Europe (Lamine 2008; Bohle 2013; Myant et al 2013). The economic boom was most visible in the states that were well on track to join the EU such as Estonia, Hungary, and Slovenia. As their banking systems channeled foreign capital into the economy, more resources became available for consumer and business loans. Driven by high demand for new housing and office space, prices in the real-estate sector grew exponentially. Chapter 4 examines the variation in regulatory approaches adopted by banking sector supervisors in the four cases during this period of rapid credit growth. Drawing on an explaining-outcome process tracing approach (Beach and Pedersen 2013), I probe which of the four independent variables presented in Chapters 2 and 3 account for the observed regulatory approach in each case.

Chapter 1 presented two contrasting approaches to banking sector supervision. First, market-based regulation was prevalent in the decades leading up to the 2008 global financial crisis. This approach is based on the assumption that if sufficient information is available on the marketplace, market discipline will force financial actors to behave responsibly, and will thus promote financial stability (Barth et al. 2006; Wymeersch 2009; de Haan et al. 2012). Second, according to the risk- averse counter-cyclical regulation approach that gained more traction after the global financial crisis, bank supervisors need to take proactive measures when they observe vulnerabilities in the banking system (Grabel 2007; Goodhart and Persaud 2008; Griffith-Jones et al. 2009).

Chapter 5 takes a broader perspective and investigates the implications of the supervisory approaches developed in the four countries over the past 15 years for redesigning the European regulatory framework in the period 2009–2013, following the global financial crisis. The regulatory reforms in Central and Eastern Europe after 1989 harmonized national legislation and practices with those of the EU. During the pre-accession period, governments did not have the option to negotiate on what terms they would adopt the EU’s body of law, the acquis communautaire, and EU legislation was mostly copied into national law (Jacoby 2004; Vachudova 2005; Grabbe 2006). In banking, all Central and Eastern European candidates for EU membership adopted the single market and financial governance provisions in the EU’s acquis.

Effective banking supervision is important for ensuring financial sector stability. A country’s choice of banking sector regulatory approach has an impact on banks’ lending decisions and the overall availability of credit in the financial system (Greenwald and Stiglitz 2003: 5–8). Market-based regulation was prevalent in the decades leading up to the 2008 global financial crisis. This approach is based on the assumption that if sufficient information is available on the marketplace, market discipline will force financial actors to behave responsibly, and will thus promote financial stability (Barth et al. 2006; Wymeersch 2009; de Haan et al. 2012). However, reliance on market regulation allowed excessive risk-taking in the financial sector and destabilized the global financial system. Recently, scholars and policy-makers have considered the potential of implementing counter-cyclical regulatory measures to make the financial sector more resilient (Griffith-Jones et al. 2009; Independent Commission on Banking 2011). Proponents of counter-cyclical regulation argue that bank supervisors need to take pro-active measures when they observe vulnerabilities in the banking system, especially to cool off credit booms (Grabel 2007; Goodhart and Persaud 2008).