EU Financial Regulation: Fragmentation, Cooperation, Competition?

Delft, 18 June 2015

The architecture of EU financial regulation is characterised by fragmentation. There are several financial regulators on the EU level (horizontal fragmentation) and each of the 28 member states has its own set of regulators (vertical). Fragmentation is likely to imply gaps, but also overlaps, and to elicit attempts of coordination as well as competition. This, in turn, evokes important legal, economic and political questions.

The European Union is a community of law (‘Rechtsgemeinschaft’), reflecting the constitutionally engrained principle of the rule of law of the member states. Horizontal and vertical fragmentation may very well create challenges to legal principles such as legal clarity, protection of rights and the right to appeal/legal redress. To what extent do legal problems materialize and how should legislation and legal processes be redesigned to address those problems?

From an economic perspective the issue of efficiency arises. How would an efficient architecture of regulators in the European Union look like? What kind of regulators for what areas should be established on the EU level and on the national level?  Should there be clearly delineated competencies (‘hierarchical/federal model) or is some level of built-in redundancies or ‘competition’ between regulators desirable?

From a political science/public administration perspective agencies can be conceived of as an important part of regulatory policy making and the question arises why this architecture came about in the first place. What is the impact of policy legacies, public opinion, interest group power and the preferences of political actors on the design? What are implications in terms who wins and who loses? One might also wonder to whom these agencies accountable and how they relate to representative democracy which claims an important role for parliaments. Finally, issues concerning the inner working and coordination come to the fore.

EURO-CEFG organised on 18 June 2015 a workshop that addressed these issues. Speakers at this workshop were Professor R. Daniel Kelemen (Rutgers University), Professor Dariusz Adamski (University of Wrocław), Dr. Adam Chalmers (Leiden University), Professor Steffen Kern (Head of Financial Stability of ESMA) and Laura Wissink (DNB).