DEFINING “FINANCIAL STABILITY”

Abstract

After the Global Financial Crisis (GFC) of 2008 the term “financial stability” rose to prominence in financial regulatory circles. The paper employs methodological tools from political economy, discourse analysis and comparative legal analysis to track the trajectory of this rise in the narratives of scholarship on financial law, policy documents and relevant European legislation and finds that the meaning of the term is subject to change and malleable. It is argued that the substance of financial stability can only be deciphered once the broader ideas about the functioning of financial markets and roles of central banks are taken into context. It is then established that these ideas were redefined in the aftermath of the GFC in line with the new macroprudential paradigm, and how they came to inform subsequent policies and legislation in the European Union.