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Financial Stability and the Global Influence of EU Law

This chapter considers the influence of European Union law in the post-crisis regulation of financial institutions on a global basis. The financial crisis of 2007–2009 created incentives for jurisdictions to ‘export’ their legislative solutions globally, in order to promote domestic stability. The resulting frictions were reduced by (a) promoting international agreement on optimal regulatory strategies and (b) using some form of mutual recognition strategy at the level of individual jurisdictions. The chapter argues that the European Union had relatively little influence on (a) because the international standard-setters are still dominated by the individual Member States. On the other hand, with the adoption of a Union level common rule book, implementation of (b) was placed in the hands of Union institutions. A case study of EU/US recognition of each other’s rules on central counterparties for derivatives clearing shows how cumbersome and political recognition may be.