The process of European monetary integration : a comparison of the Belgian and Italian approaches

This paper analyses and compares the roles which Belgium and Italy have played in the process of European monetary integration. It discusses Belgian and Italian attitudes towards European integration and EMU, exchange rate policies, key concepts of the Belgian and Italian EMU strategies and the concrete contributions made by Belgium and Italy. Overall, these two countries played an important and pace-setting role in the process of European monetary integration. They developed several creative and diplomatic proposals. Moreover, Belgian and Italian policy-makers often acted as "policy entrepreneurs" and proved to be skilful negotiators. The main difference is that Belgium has been a constant and consistent "pace-setter" in monetary matters, from the preparation of the Hague Summit to the elaboration of the EMS, the monetary chapter in the Single European Act and the realisation of EMU, whereas Italy was mainly active in the 1980s. This assessment of the Belgian and Italian contributions does not challenge the decisive impact of the Franco-German axis, but illustrates that EMU was a multilateral process. Furthermore, the paper shows how important it was for a country to achieve a sound economic performance, especially a stable exchange rate, in order to have influence on the European monetary scene.European monetary integration, Belgium, Italy

France's and Italy's Policies on European Monetary Integration: a comparison of 'strong' and 'weak' states

This work compares France and Italy's policies on European monetary integration from the early 1970s arguing that the very different state structures determined the different policies pursued towards European monetary integration. France is a 'strong' state in terms of macroeconomic policy-making in that it was able to coordinate the activities of national institutions in order to produce coherent macroeconomic policies that were a crucial condition for taking part in European monetary integration. Italy, in contrast, is characterised by an 'archipelago' configuration with weak political capacity, which resulted in less coherent and effective macroeconomic policies, thus challenging its participation in European monetary agreements. State traditions also affected the views of the respective countries on European integration with French policy makers largely in favour of an intergovernmental approach and Italian policy makers supporting a supranational one. Overall, whereas it was politically problematic for France to accept the principles of a supranational Economic and Monetary Union as well as central bank independence, the main obstacle for Italy was to achieve economic convergence.EMU; Euro; economic performance; economic policy; France; Italy

"The Politics of financial services regulation and supervision reform in the EU*"

The regulation and supervision of financial services in the European Union has undergone major reform between 1999 and 2004. This policy evolution is theoretically interesting, raising the question of which conceptual approaches better explain it, and it is also empirically relevant because it is an area of intense EU activity. This article provides a theoretically-informed and empirically-grounded explanation of the policy reform by competitive hypothesis testing, mainly by relying on two methods: process tracing and congruence procedure, employing a variety of primary and secondary sources. It is argued that sequencing different theoretical approaches - interdependence, supranational governance and liberal intergovernmentalism - explains the various stages of the policy-making process, namely, background-setting, agenda-setting, and decision-making, as well as the main features of the outcome

The non-reversal of delegation in international standard-setting in finance: The Basel Committee and the European Union

International non-majoritarian institutions (NMIs) in finance have proliferated over the last decades. The Basel Committee on Banking Supervision (BCBS) is the main international NMI in finance and the European Union (EU) is one of its core jurisdictions. Despite the far-reaching effects of international banking standards in the EU, especially the Basel accords, there has been limited politicization of delegation to the BCBS and no attempt to reverse it. Why? By taking a “soft” principal-agent approach, this paper points out two explanatory factors: the composite nature of both the principal and the agent. It also identifies a pattern that can be generalized to other international NMIs in finance. Thus, following the initial delegation of international standard-setting to the BCBS, this international NMI considerably increased its activities, going beyond what certain elected officials wanted; the response from elected officials was limited to the use of relatively weak ex-ante and ex-post controls, including delayed compliance

The Political Economy of the Single Supervisory Mechanism: Squaring the ‘Inconsistent Quartet’

This paper sets out to explain national preferences on the Single Supervisory Mechanism (SSM) concerning: support for creating and participating in supranational banking supervision in the European Union; the division of competences between the European Central Bank and national banking supervisors; the nature of indirect supervision. It is argued that member states in the euro area faced a ‘financial inconsistent quartet’, whereby they could not secure at the same time: 1) financial stability, 2) financial integration, 3) national financial policies and 4) the single currency. The ‘financial inconsistent quartet’ reinforced the logic for euro area member states to create the SSM (and other elements of Banking Union) and those seeking to join the euro area to participate. However, the analytical usefulness of this concept to explain national preferences on the SSM relies upon its nuanced application to individual countries taking into account the distinct patterns in the internationalisation of national banking systems

Banks and the political economy of the sovereign debt crisis in Italy and Spain. CES Papers - Open Forum #18, 2013-2014

This paper sets out to explain why Spain experienced a full-fledged sovereign debt crisis and had to resort to euroarea financial assistance for its banks, whereas Italy did not. It undertakes a structured comparison, dissecting the sovereign debt crisis into a banking crisis and a balance of payments crisis. It argues that the distinctive features of bank business models and of national banking systems in Italy and Spain have considerable analytical leverage in explaining the different scenarios of the crises in each country. This ‘bank-based’ analysis contributes to the flourishing literature that examines changes in banking with a view to account for the differentiated impact of the global banking crisis first and the sovereign debt crisis in the euroarea later

Regulators and the Quest for Coherence in Finance::The Case of Loss Absorbing Capacity for Banks

After the international financial crisis, new financial regulation was adopted at the international, regional and national levels, raising the issue of how to promote regulatory coherence, defined as the consistency between the rules adopted at different governance levels and in a variety of policy venues. A major recent area of reform concerned the loss absorbing capacity (LAC) of banks. In practice, the lack of regulatory coherence concerning LAC hampers the effective resolution of large international banks in a timely manner, ultimately undermining financial stability. We examine the role of regulators in the quest for coherence on LAC, explaining the incentives they had and how they deployed their delegated competences at different levels to achieve coherent rules that ensure financial stability. Theoretically, we combine insights from the public administration and political economy literatures. Methodologically, we process trace the making of LAC rules on three governance levels and in multiple policy venues

Multi-level financial regulation and domestic political economy: accounting for the UK’s shifting regulatory outlook, from post-crisis reform to Brexit

Scott James and Lucia Quaglia discuss the UK’s role in shaping post-crisis financial regulatory reform, and assess the implications of its withdrawal from the EU. Drawing on their recent book, they use a domestic political economy approach to examine how the interaction of UK officials, financial regulators, and the financial industry shaped UK preferences, strategy, and influence in international and EU-level regulatory negotiations. They conclude by reflecting on the future of UK financial regulation after Brexit