Power and accountability in the EU financial regulatory architecture : examining inter-agency relations, agency independence and accountability

Abstract

Institutional reforms carried out at the EU level in the aftermath of the global financial crisis were purposed towards preserving the stability and well-functioning of financial markets in the EU. The European System of Financial Supervision was first created, followed by the Single Supervisory Mechanism supported by the Single Resolution Mechanism. The proliferation of European level regulatory and supervisory authorities has recalibrated the exercise of public authority over financial markets, and significant power has shifted from national to European level agencies. The creation of EU level agencies is supported by avenues of formal accountability in political, stakeholder and judicial accountability, resulting in some complex designs in power structures. The article argues that such complex designs may affect the autonomy and technocratic efficacy of institutions. However, there is potential in leveraging upon one aspect the complexity offers- inter-agency coordination, in order to promote learning for technocratic effectiveness as well as to cultivate a form of accountability that ameliorates the perception of excessive power. The paper will focus on the inter-relationships between the three European sectoral agencies, especially in the Joint Committee and Board of Appeal to illustrate the achievements of inter-agency coordination and accountability. The paper will go on to explore new challenges that arise with the introduction of the SSM and SRM into the EU financial regulatory architecture. The paper will argue that promoting inter-agency coordination in specific areas may have the potential to address some of these challenges. The broader notion of inter-agency accountability can also spawn future lines of discourse and research into improving the credibility and legitimacy of the exercise of power by EU level agencies.