Dilemmas in post-crisis bank regulation: Supranationalization versus retrenchment

Abstract

The US financial crisis that started in 2007 ultimately had global reach, but those countries most severely affected were the advanced industrialized states. In the United States and Europe, banks, many of which had regional or global profiles, were the source of nearly unprecedented economic instability. This special issue therefore examines the politics behind the re-regulation of banks after the crisis, focusing on the Transatlantic community. The volume finds competing impulses for enhanced international regulatory coordination on the one hand versus national retrenchment on the other. From these two dueling agendas flow three notable developments. First, despite evident functional pressures for a coordinated and global approach to bank regulation following the crisis, regional arrangements have dominated instead. Second, reduced international capital flows and bank activity were as much the result of national and regional regulatory measures as they were a function of market conditions. Third and finally, where national retrenchment has prevailed at the expense of international regulatory harmonization, we see risks for further international financial instability.