Since 2000, the financial stability framework of the European Union (EU) has gone through major changes. Both the financial crisis (2008-2009) and the European debt crisis (2009-) triggered reforms. This report primarily contributes to the study of the political foundations of financial stability and it aims to uncover the decision-making logic behind the evolution of the EU financial stability framework. It uncovers why EU Member States tend mostly to agree on piecemeal institutional reforms that may in fact increase vulnerabilities by not sufficiently addressing the underlying problems of financial instability.
This report finds that decision-makers might not fully understand the risk of piecemeal reforms. The evolution of the EU financial stability framework demonstrates that policy learning is lagging real economic problems also when it is problem- and crisis-driven, and that the weaknesses of intergovernmental bargains become more prominent in times of crises.
Eirik Tegle Stenstad has a Master of Political Science from the University of Oslo. He was affiliated with ARENA through the student scholarship.
ARENA Report 4/17 (pdf)
Failing Forward Towards Reduced Instability? Integration and Aggregation in EU Financial Regulation
Eirik Tegle Stenstad
October 2017