Lucia Quaglia

Banking on Stability: The Political Economy of New Capital Requirements in the European Union

Abstract The Basel III Accord on a ‘Global regulatory framework for more resilient banks and banking systems’ was issued in late 2010 as the cornerstone of the international regulatory response to the global financial crisis. Its adoption into European Union (EU) legislation has, however, been met with considerable member state reticence and intra-EU negotiations are ongoing. This paper investigates the political economy of new capital requirements in the EU, arguing that the institutional features of national banking sectors convincingly account for the divergence in EU member state preferences on capital rules.

Completing the single market in financial services: the politics of competing advocacy coalitions

Why has the completion of the single market in financial services proved so difficult and time consuming? This paper addresses this question by evaluating the explanatory power of a revised version of the ‘advocacy coalition framework’ against the empirical record of the policy-making processes of key pieces of legislation dealing with securities trading in the EU. The findings suggest that in almost all the Lamfalussy directives, the main (but, by no means, the only) line of division was between a ‘market-making’ coalition and a ‘market-shaping’ one. This was owing to differences in the national regulatory frameworks, the configuration of national financial systems and their competitiveness (hence, ‘interests’). However, the tension was also a consequence of different belief systems (hence, ‘ideas’) about financial services regulation. The latter have undergone a significant reappraisal as a result of the global financial crisis.

Committee governance and socialization in the European Union

ABSTRACT This article reviews theoretically grounded empirical studies on committees in the European Union by focusing on research published from the late 1990s onwards. The aim is to report on the state of the art and to shed light on emerging puzzles, research gaps and promising venues for further research. We examine research questions, theoretical approaches, design, and the main empirical findings. The conclusions provide our critical remarks and suggestions for further research.

The ‘Old’ and ‘New’ Politics of Financial Services Regulation in the European Union

This research examines the regulatory response of the European Union to the global financial crisis, addressing the questions of whether, how and why the global financial crisis has changed the ‘old’ politics of financial services regulation in the EU and resulted in the emergence of a ‘new’ politics. It is argued that, with a good dose of political opportunism and ‘anti-free market’ rhetoric, a continental advocacy coalition sponsoring a ‘market-shaping’ regulatory approach has capitalised on the crisis, tipping the balance of regulatory power in the EU in its favour, as compared to the pre-crisis situation.

Setting the pace?: Private financial interests and European financial market integration

The regulation and supervision of financial services in the EU has undergone significant change between 2000 and 2005, when the so-called Lamfalussy framework, the Basel 2 agreement and its transposition into the Capital Requirements Directive were agreed. This research examines the preferences of national financial interest groups in Germany and the UK (the independent variable) in shaping national input and, more precisely, the contributions given by the relevant public authorities to EU and international policy-making processes (the dependent variable). The impact, if any, on the final outputs (the relevant international and EU agreements) is also discussed. It is argued that the level of involvement of each interest group depends on the policy content, namely, whether the policy concerns a broad institutional issue or specific rules, while the degree of interest group influence in policy-making processes depends on domestic institutions, namely state structure, interest representation and political economy institutions.

Italian politics and the European Union: A tale of two research designs

Drawing on the conceptual framework of Europeanisation, we trace the influence of the European Union (EU) on Italian politics by combining top-down analysis (that is, how Italy has adapted to pressure coming from Brussels) with a bottom-up examination of how Italian policy makers have encountered the EU in their attempts to pursue domestic policy goals. We find that the foreign policy orientation and policy preferences of the governing coalition determine the posture, style and choice of institutional venues. Taken together, bottom-up and top-down assessments of Europeanisation suggest that, during the second Berlusconi government, the influence of the EU in Italian politics was limited – although not trivial. When the Berlusconi government (2001–06) faced high pressure, it tried to reduce it at source rather than adapting to EU policies. By contrast, the centre-left governments (1996–2001) used pressure as a lever for policy change, while the governments of the 1980s responded to pressure by delaying implementation.

Financial regulation and supervision in the European Union after the crisis

The global financial crisis challenged the existing architecture for financial services regulation and supervision in the European Union (EU). This article first examines the new pieces of legislation that were issued by the EU in the wake of the crisis, as well as substantial revisions of existing EU legislation. Second, it conducts an overall assessment of the reforms implemented and highlights some open issues that were underscored by the crisis and that were only partially addressed afterward. It is argued that the framework for financial regulation and supervision in the EU after the crisis is still poorly equipped to deal with (or to prevent) future financial crises mainly because of the political constraints encountered during the reform process. One of the most important lessons to be drawn is that political factors are as important as (if not more important than) economic factors in shaping financial services regulation and supervision in the EU (and, arguably, elsewhere).

The ‘Old’ and ‘New’ Political Economy of Hedge Fund Regulation in the European Union

This article assesses the ‘old’ and ‘new’ political economy of hedge fund regulation in the EU, explaining why the EU has decided to regulate hedge fund managers in the aftermath of the global financial crisis. A Franco-German alliance, with the support of Italy, other Mediterranean countries and some quarters of the European Parliament, has driven the EUs attempt to regulate hedge funds. The new EU rules are explained by institutionally-shaped economic interests rooted in national varieties of financial capitalism – the ‘old’ political economy of hedge fund regulation. However, ‘ideas’, in the form of competing regulatory paradigms, are instrumental in explaining why one coalition of actors has prevailed over the other in EU rule-making – the ‘new’ political economy of hedge fund regulation.

Financial Sector Committee Governance in the European Union

Abstract This paper examines the working of the ‘Lamfalussy committees’ in the banking and the securities sectors, asking whether these are ‘technical’ committees or ‘parapolitical’ ones. These committees are composed of experts (national civil servants) discussing regulatory and supervisory issues in a technical policy area — financial services. However, the issues discussed have political salience. It is argued that these committees of experts tend to be argument‐based (level 2) and evidence‐based (level 3), even though politics, as opposed to expertise, enter the policy process under specific circumstances. This combination of politics and expertise originates a distinctive type of informal governance.

Network Constraints in EU Banking Regulation: The Capital Requirements Directive

The ongoing financial turmoil has brought into sharp relief the importance of financial services regulation. Yet, we still know relatively little about how financial regulation is negotiated within the EU, in particular which policy actors are most influential and what are the mechanisms that allow them to exercise influence. This paper addresses these questions using Social Network Analysis (SNA), focusing on the banking regulation network and one core piece of legislation: the Capital Requirements Directive (CRD). Of particular interest is the flow of influence among the key actors. Triangulating an in-depth case study with qualitative interview data and social network analysis, this work investigates a number of hypotheses, associating brokerage roles and extroversion with relative influence in the policy making process. We find that influential actors are those that hold key structural positions in this network and by implication appear to have a better understanding of network topography.