Panel 715: Economic and Financial Governance
EU Financial Consumer Protection: A Conduit for Financialisation?
Ghent University, Belgium
Financial consumer protection (FCP) has been upgraded substantially on the international policy agenda following the 2008 global financial crisis, which was partly rooted in weak consumer protection provisions. The ensuing regulatory effort in the EU to better protect citizens when managing their financial lives consisted of intense rule-making and institutional change. New EU rules were adopted across banking, securities and insurance markets, while the European Supervisory Authorities (EBA/ESMA/EIOPA) received an explicit mandate to foster FCP in the EU. Research on financial regulation has evolved from legal, economic and institutional implications towards a more comprehensive political economy approach. What has shaped, or rather held back, the post-crisis regulatory overhaul? Whose preferences have prevailed and what political and economic objectives were pursued? In this paper, I adopt this political economy lens to better understand the dynamics governing EU FCP. First, I present an overview of ideational discussions underpinning EU FCP and link this to the emerging concept of financialisation. Second, I collate these ideas with policy outputs in the realm of EU FCP to demonstrate that the result was hardly transformative. Third, I discuss possible variables which help to explain this weak output, drawing from literature on interest group politics and EU financial integration. Empirically, this will be backed up with an analysis of public policy papers of EU FCP stakeholders. Overall, this paper contributes to the debate on EU financial regulation by establishing a clear link between financial consumer protection and the concept of financialisation.
The European Central Bank - the Prisoner of its Independence
University of Helsinki, Finland
During the the euro crisis the European Central Bank (ECB) was the only institution capable for preventing the collapse of the single currency. The ECB responded to the crisis extensively by pushing down interest rates and ensured the liquidity by lowering its collateral requirements. In addition the ECB introduced controversial and unconventional bond purchase programmes and joined the Troika with the European Commission and the International Monetary Fund. The ECB involved more deeply in politics by conditioning its emergency lending programs to the acceptance of the Troika's adjustment programs. The ECB presidents even sent letters to Italian and Spanish governments demanding robust budget policies and structural reforms in exchange of financial support.
All these measures meant that the ECB's responsibilities expanded from the guarantor of price stability to a broader range of regulatory, supervisory and quasi-fiscal tasks. Although the ECB's mandate has not been modified after the crisis it is much more unclear to politicians and the broader public what are the ECB's monetary targets and instruments for achieving them. Altogether the ECB's vital role in managing the euro crisis questions the apolitical nature of central banking assumed in the Maastricht Treaty.
The focus of this paper is to study how did the euro crisis affected the independence of the ECB. The founders of the euro tried to isolate the ECB from political pressures of national and EU authorities by granting the ECB with almost unlimited autonomy to achieve its price stability mandate. My argument is that national authorities started to exploit the ECB's independence during the euro crisis. Although the ECB succesfully forced crisis countries to accept bailout conditions and won institutional battle against the German Constitutional Court about bond purchases, the ECB was unable to affect deeper integration of the single currency. By analyzing institutional and constitutional power battles inside the ECB as well as between the central bank and euro nations I argue that the ECB has became the prisoner of its independence. By this I mean that the inability of the euro member states to formulate sufficient crisis measures fast enough forced the ECB to participate more deeply to the crisis management than it actually desired. These developments question the ideals of central bank independence as well as underlines the need to study more deeply the relationship between fiscal and monetary authorities after the great financial crisis.
Monetary Politics in the Eurozone: The Role of Institutional and Political Contexts for Patching the Common Currency Regime
University of Duisburg-Essen
In the period after the financial crisis, the European Central Bank
(ECB) became one of the most important institutions of the European Union (EU), willing “to do whatever it takes, to preserve the Euro”.
This development entailed the shift of important discretionary power towards the central bank. Inter alia, the ECB became Europe’s Lender of Last Resort and received new competences in context of financial supervision. But ECB’s transparency and accountability framework did not expand correspondingly. This differentiated outcome is puzzling. Why do politicians shift more unattended discretionary power to unelected bureaucrats, and why do they not increase public scrutiny? The project traces the process of political influence on the independent central bank in three different areas, namely monetary policy, institutional choices and the appointment of central bankers. It finds that political and institutional contexts of these cases explain differences in their degree of change. While in times of existential pressure the institutional setting of the EMU privileges a hierarchical mode of governance over the community method, the simultaneous high uncertainty of the situation renders delegation to experts an appealing strategy to overcome institutional constraints. A cross-case comparison further reveals a comprehensive strengthening of non-political decision making, which in effect risks increasing EU’s democratic deficit. The article rests on a combination of different qualitative research approaches, and it assembles comprehensive and new data for developing its novel argument on contemporary European monetary politics.
Watching the EU Watchmen: Assessing the Accountability Powers of Three EU Watchdogs
1Leiden University; 2Utrecht University
Independent oversight institutions are critical components of the accountability landscape in modern democracies. This paper assess the strength of the accountability powers of three main watchdog institutions in the EU, the European Ombudsman (EO) the European Court of Auditors (ECA) and OLAF. The paper presents a comprehensive analysis of how these three EU watchdog institutions promote accountability. It looks at its formal and institutional powers and the accountability practice in these watchdogs that operate in the EU multilevel governance context. The aim is to provide a richer evidence base to the role and function of external accountability arrangements and their effectiveness.
We apply an index to assess the strength of the accountability powers, and data are collected by means of an expert survey, a study of secondary sources and analysis of annual reports and other relevant documents. A comparison of the accountability the power of the three institutions shows clear differences between these EU watchdogs.