In this paper, G. Pagoulatos reviews some of the main weaknesses of the EU and EMU financial architecture, sketching principal directions of reform. The recent crisis was a hard test for the European financial architecture and it has offered useful insight over market failures in the functioning of the globalized financial system. According to the author, the current institutional structure of regulatory and supervisory fragmentation in the EU hampers the chances of an effective crisis management.
The paper focuses on appropriate and Europe-wide institutional responses at this time of crisis. The author considers that regulatory and supervisory fragmentation inhibits a more effective leadership role of the EU in global financial negotiations and governance.There is a strong argument to be made in support of single, integrated, cross-sectoral financial supervision. Moreover, there are good reasons for assigning financial supervision to an institution separate from the ECB. Finally, regulatory initiatives would be incomplete if they failed to tackle serious patterns of tax evasion that distort actors’ incentives and market function.
Read the whole paper (available in english).