Banking on a union: the politics of changing eurozone banking supervision

ABSTRACT

In 2012, the European Union (EU) adopted a transformational change to its banking policy for the eurozone. It replaced the policy model of decentralized supervision and regulatory competition between countries with a single supervisor and a more harmonized approach. Transferring banking supervision to the European level also alters the constitutional order. The process of this transformational change was rapid and highly political, which was different compared to earlier incremental changes. Kingdon's model whereby policy entrepreneurs seize opportunities when the independent streams of solutions, problems and politics converge partly explains the process and timing of this transformation. The study of EU banking policy suggests, however, that the multiple streams framework should pay more attention to the way in which entrepreneurs engineer fluctuations within the streams and thereby contribute to creating opportunities for change. This article identifies the supranational European Central Bank as an effective entrepreneur which also played an active role in political bargaining.

KEY WORDS:

• Agenda-setting
• banking union
• ECB
• eurozone
• multiple streams model
• policy change

Acknowledgements

I would like to thank Boston University's Centre for the Study of Europe for hosting me on a sabbatical from the European Commission. I thank the three anonymous referees of this journal, as well as Jeffrey Frieden (Harvard University), Paul Taylor (Reuters), Vivien Schmidt (Boston University), Tobias Tesche (European University Institute) and Nicolas Véron (Bruegel) for comments on an earlier draft.

Notes

1 Data were collected via participatory observation in the policy process, an analysis of policy papers and media, as well as interviews with senior policy-makers in the Commission, the European Council, journalists and think tank experts. During the period before and after the European Council of June 2012, I was spokesperson of Michel Barnier, member of the European Commission in charge of banking union and financial services. In this capacity I attended formal and informal Council meetings.

Additional information

Notes on contributors

Stefaan De Rynck

Biographical notes

Stefaan De Rynck is head of unit in the financial services department of the European Commission, and teaches EU politics at the College of Europe in Bruges and the Collegio Alberto of the University of Turin. This article does not reflect the official opinion of the European Commission.