Abstract
This chapter asks three questions: To what degree has the European financial and debt crises spurred new policies and purposeful action toward improved financial stability regulation? Secondly, how can we theorize the processes that link crises and policy? And thirdly, we ask if what has been achieved is likely to be sufficient to avoid another crisis? We measure policy change along three dimensions: level of aggregation, level of governance, and functional scope, and find significant change along the two first. This is explained by the “failing forward plus learning” framework that we develop. We do, however, find enough chinks in the EUs newly erected armour to predict that processes of failing forward will continue. Thus, we conclude that muddling through best describes the EU’s post-crisis efforts in financial stability regulation.
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Notes
- 1.
The American AIG had only about 40% domestic business in 2008 when they nearly failed (ibid.: 31). If the US government bailed out AIG, only 40% of the benefit would go to them. It was only saved because the Americans perceived the benefits for them to be large enough.
- 2.
The last conflict is not relevant for the three dimensions. However, non-Eurozone countries were allowed to opt in (Howarth and Quaglia 2013: 114–115).
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Stenstad, E.T., Tranøy, B.S. (2021). Failing Forward in Financial Stability Regulation. In: Riddervold, M., Trondal, J., Newsome, A. (eds) The Palgrave Handbook of EU Crises. Palgrave Studies in European Union Politics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-51791-5_22
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