Abstract
In the past, France and Germany were able to exercise leadership in history-making decisions in monetary cooperation, from the establishment of the EMS to EMU. In the case of Banking Union (BU), however, Germany and France turned out to be the main opponents with little common influence. Why could we not observe the familiar pattern of Franco-German co-leadership in building the BU? My explanation points to diverging views on the social purpose of a BU, the asymmetrical distribution of its costs and benefits for the two countries, highly prominent distributional conflicts and severe domestic constraints in Germany. These explanatory factors also account for the unfinished character of Banking Union.
Notes
1. Due to space restrictions, this article will not cover the domestic origins of French and German preferences on Banking Union issues, based in the political economy of their banking sectors and economic ideas. These are dealt with in Howarth and Quaglia Citation2016; on the importance of ordoliberal ideas for the German preference formation on BU, cf. Schäfer Citation2016.
2. Another contentious issue, which is beyond the scope of this paper, was the relationship between the “ins” and “outs” of the Eurozone and the link between the euro area and the single market, see Moloney Citation2014.
3. Own calculations based on Bank of International Settlement, Quarterly Reports, June 2012.
4. In a formal sense, Germany had a veto only in the case of the SSM regulation, based on article 127(6) TFEU which requires unanimous adoption, whereas the other proposals were negotiated under the ordinary legislative procedure – except the Intergovernmental Agreement signed in May 2014 on the build-up of the SRF.