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Geopolitical Economy and Competing Capitalist Blocs in the EU Post-Crisis Financial Regulation: Two Cases from the Reform of the Banking Sector
Abstract
In this contribution I will test the geopolitical-economic approach as formulated by Desai (2013) in the analysis of the EU's regulatory response to the financial crisis by focusing on two relevant pieces of legislation in the post-crisis reform of banking governance: the adaptation of the Basel III agreement to the package on Capital requirements, composed of a regulation and a directive, and the ongoing legislative process concerning the structural reform of banks. As I try to show, the concept of “competing geopolitical bloc” derived from the work of Desai, but even detectable in some recent Neo-Gramscian literature, is useful in analysing the shortcomings of the European regulatory response to the 2007/8 economic and financial crisis.
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The percentage of assets, weighted according to different risk-assessment models established under the Basel II agreement.
The German law was definitively approved in June 2013 (Deutscher Bundestag 2013), the French one a month later (République Française 2013), while the UK Banking Reform Act was passed in December 2013 (UK Government 2013).
The German law was approved in the context of the German federal election (September 2013): Merkel's government had to rapidly counteract the competing Steinbrück's social-democratic program on a national banking structural reform (see Buergin 2013). In the French case, the law on banking separation was one of the principal financial reforms pursued by Hollande soon after his election in May 2012.
The institutions in question must register, for three consecutive years, “total assets amounting at least to EUR 30 billion and trading activities amounting at least to EUR 70 billion or 10 per cent of its total assets” (European Commission 2014a, 23).
The Commission Impact Assessment openly states that “[t]he impact on the banking industry should also be limited, given claims that banks no longer engage in this activity to a material extent” (European Commission 2014b, 58).
While this article was already under review, on June 19, 2015, the ECOFIN agreed on a common negotiating stance on the banking structural reform: unfortunately I have not had the possibility to take it into account here.