The European Union and global financial regulation

Abstract

This book examines the influence of the European Union (EU) in regulating global finance, addressing several interrelated questions. Why does the EU ‘upload’ international financial regulation in some (few) cases, ‘download’ it in (many) other cases, and ‘cross-load’ it either actively or passively in other instances? Has this changed over time? Under what conditions is the EU more or less likely to upload, download, or cross-load rules? Overall, does the EU act as a pace setter in regulating global finance, or is it mainly a follower? Why? The key explanatory variable used in this research is the concept of ‘regulatory capacity’, applied to the EU and the US, distinguishing between ‘strong’ and ‘weak’ regulatory capacity. The influence of the EU in global financial regulation depends on the combinations of EU and US regulatory capacities. When EU regulatory capacity is weak and US regulatory capacity is strong, the EU mainly downloads international rules or passively cross-loads them from the US. When the EU regulatory capacity is strong and US regulatory capacity is weak, the EU is able to upload its rules internationally and/or actively cross-loads them to third countries. When the EU and the US regulatory capacities are weak, private sector governance prevails. When the EU and US regulatory capacities are strong, both jurisdictions seek to upload and cross-load their domestic rules.