Crisis-Driven EU Financial Regulatory Reform
Eilís Ferran, Niamh Moloney, Jennifer G. Hill, and John C. Coffee, Jr. THE REGULATORY AFTERMATH OF THE GLOBAL FINANCIAL CRISIS, Cambridge University Press, 2012
36 Pages Posted: 26 Mar 2012 Last revised: 18 Apr 2012
Date Written: March 23, 2012
When detailed research into the impact of the new laws adopted by the EU in response to the global financial crisis and the euro area sovereign debt crisis eventually comes to be done, the search for explanations as to why the EU has, or has not, managed to adopt effective reforms can be expected to lead back to the preferences and aims of the main actors and institutions that were involved in the lawmaking process. In anticipation of this, the chapter from which this paper is extracted focuses on the factors driving the Member States and the EU institutions in drawing up the post-crisis regulatory agenda and in transforming policy ideas into legislation. The chapter seeks to establish the location of significant sources of influence with respect to agenda-setting, to identify the preferences of the key opinion-formers, and to determine the extent to which such preferences have made it into law rather than being filtered out during the many rounds of negotiation and compromise that are part of the EU lawmaking process. As well as its explanatory force with respect to the reforms adopted in the immediate aftermath of recent turmoil, there is also a forward-looking dimension to the exercise conducted in the chapter. The new regulatory approach involves putting in place 'stringent, efficient and harmonized rules for all operators, coupled with an effective supervisory framework, strong, dissuasive sanctions and clear enforcement mechanisms' (European Commission). But when and where does harmonized EU financial regulation reach its limits? Is the supranational approach now becoming all-'embracing? With respect to the content of new laws, will considerations of 'stringency' prevail over those of 'efficiency' in the drafting of an ever more prescriptive and lengthy harmonized rulebook? Will the urge to dissuade and deter leave no room to entertain the possibility that providing incentives to comply could produce better results? Will the emphasis on achieving pan-European uniformity in supervision mean that calls for rigid rules trump arguments that favor leaving room for the operation of a judgment-based approach? Where will moderating influences come from? EU constitutional legal principles, such as the need for a Treaty competence and the notions of subsidiarity and proportionality, are seemingly becoming increasingly weak mechanisms for containing the expansion of EU financial regulation. The attenuation of legal constraints reinforces the crucial importance of paying close attention also to the potency of the political safeguards in the legislative process. This chapter therefore draws upon political economy understandings of EU financial market integration and on valuable evaluations of the impact of the crises that political scientists have already put forward. Some issues take on a different complexion when viewed from a lawyer’s perspective.
Suggested Citation: Suggested Citation