This article analyses the role of the EU institutions in guiding the EMU reform process. Many have argued that the institutions have had to adapt to a 'constraining' environment in which EU negotiations are highly salient and touch upon 'core state powers'. To explain how they have been adapting, we provide a detailed process tracing analysis of their role in setting up the banking union. We use insights from principal-agent (PA) theorizing, but extend this framework to account for situations in which there are multiple agents. The analysis shows that in spite of overlapping interests, functional imperatives and a crisis atmosphere, there was nothing inevitable about the banking union. It came about through new patterns of institutional collaboration at different stages and between different levels of decision making. We explore the implications of this type of collaborative leadership at the level of agents, arenas, process and substance.
The Banking Union has significantly changed both the legal and the political landscape of the EU. All supervision of banks in the Euro Area will now ultimately be the responsibility of the ECB and no longer of the national banking supervisors, and a new European Agency and ultimately the Commission, in cooperation with the Council of Ministers, will be responsible for the resolution of banks facing serious difficulties. This article explores the main constitutive elements of the Banking Union, how they came into being and how they interact both within the Banking Union itself and with the EU as a whole.
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