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Power Politics and the Undersupply of Financial Stability in Europe

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  • Shawn Donnelly

Abstract

This article analyses the politics of banking and fiscal union in the EU in the context of continued threats to financial stability in Europe. Contrasting the expectations of functional responses and power politics, it finds that the behavior of the states and the outcome of negotiations most closely resembles contemporary realist expectations. Minimal supranationalism takes place to prevent complete collapse, but the main development is that financially powerful member states coerce and impose changes on weaker member states, without committing to the financial transfers that the latter require to survive the financial crisis, with negative consequences for European financial stability.

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  • Shawn Donnelly, 2014. "Power Politics and the Undersupply of Financial Stability in Europe," Review of International Political Economy, Taylor & Francis Journals, vol. 21(4), pages 980-1005, August.
    • Handle: RePEc:taf:rripxx:v:21:y:2014:i:4:p:980-1005
    DOI: 10.1080/09692290.2013.801021
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    References listed on IDEAS

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    1. Bruce Lyons, 2009. "Competition Policy, Bailouts, and the Economic Crisis," CPI Journal, Competition Policy International, vol. 5.
    2. Jonathan Story & Ingo Walter, 1997. "Political Economy of Financial Integration in Europe: The Battle of the Systems," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262692031, December.
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    4. Bruce Lyons, 2009. "Competition Policy, Bailouts and the Economic Crisis," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2009-04, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    5. Rishi Goyal & Petya Koeva Brooks & Mahmood Pradhan & Thierry Tressel & Giovanni Dell'Ariccia & Ceyla Pazarbasioglu, 2013. "A Banking Union for the Euro Area," IMF Staff Discussion Notes 13/01, International Monetary Fund.
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    Cited by:

    1. Hasan Dinçer & Ozlem Olgu Akdeniz & Umit Hacioglu, 2018. "Competitive strategy selection in the European banking sector using a hybrid decision-making approach," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(1), pages 213-242.
    2. David Howarth & Lucia Quaglia, 2015. "The political economy of the euro area's sovereign debt crisis: introduction to the special issue of the Review of International Political Economy," Review of International Political Economy, Taylor & Francis Journals, vol. 22(3), pages 457-484, June.
    3. Jan Libich & Liam Lenten, 2022. "Hero or villain? The financial system in the 21st century," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 3-40, February.
    4. Francesca Gambarotto & Stefano Solari, 2015. "The peripheralization of Southern European capitalism within the EMU," Review of International Political Economy, Taylor & Francis Journals, vol. 22(4), pages 788-812, August.
    5. Ioannis Asimakopoulos & David Howarth, 2022. "Stillborn Banking Union: Explaining Ineffective European Union Bank Resolution Rules," Journal of Common Market Studies, Wiley Blackwell, vol. 60(2), pages 264-282, March.
    6. Rachel A. Epstein & Martin Rhodes, 2014. "Banking Nationalism on the Road to Banking Union," KFG Working Papers p0061, Free University Berlin.

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