It is now widely recognized that regulatory failures contributed to the onset of the global financial crisis. Redressing such failures has, thus, been a key policy priority in the post-crisis reform agenda at both the domestic and international levels. This special issue investigates the process of postcrisis financial regulatory reform in a number of crucial issue areas, including the rules and arrangements that govern financial supervision, offshore financial centers and shadow banking, the financial industry's involvement in global regulatory processes, and macroeconomic modeling. In so doing, the main purpose of this special issue is to shed light on an often understudied aspect in regulation literature: the variation in the dynamics of regulatory change. Contributors examine the different dynamics of regulatory change observed post-crisis and explain variations by accounting for the interaction between institutional factors, on the one hand, and the activity of change agents and veto players involved in the regulatory reform process, on the other.
This paper investigates the motivations that led policy-makers to delegate macroprudential authorities to newly created independent systemic regulatory authorities (SRAs). Three case studies are examined: the US Financial Stability Oversight Council, the European Systemic Risk Board and the UK's Financial Policy Committee. Policy-makers' motivations are captured by examining the specific institutional features of the newly created SRAs and by tracing the legislative debates that surrounded their creation. The findings of this empirical analysis call into question several of the conventional claims that are used to justify delegation to technocratic agencies from the functionalist and ideational scholarship. Given the limitations of the explanations based on efficiency considerations and socialisation of welfare losses, this paper suggests that the delegation of powers to SRAs was ultimately motivated by what is referred to as the 'logic of symbolic politics.' It is argued that the main motivation that emerges from the legislative debates for delegating this important task is that the SRAs provided a quick institutional 'fix' to signal to the public that in the wake of the international crisis of 2007-2009, policy-makers were redressing regulatory mistakes made prior to and during the crisis that had caused a severe deterioration of public's wealth.
This article • Contributes to the literature on ideational change by bringing to the surface an incremental ideational dynamic after major crises that differs from the well-known punctuated dynamic; • Explains the incremental dynamic of ideational change after a major crisis based on the flexibility of the institutional environment in which actors operate. Specifically, rather than preventing change until an explosion of radical change occurs, institutional frictions may also allow for successive adjustments over time; • Illustrates the theoretical arguments by examining the changes that have taken place in the IMF's thinking on capital controls since the start of the 2008 crisis; • Traces one of the most debated developments in the post-crisis international political economy, namely the rehabilitation of capital controls.Although much scholarly attention has been devoted to examining the punctuated dynamics of ideational change, other dynamics exist. Ideational change may well occur incrementally in ordinary times or, as this study shows, can also materialise after a major shock, such as a financial and economic crisis. By examining the IMF's new approach to capital controls in the aftermath of the global financial crisis, the article demonstrates that the non-punctuated nature of ideational change can be explained in light of the enabling (and not solely constraining) features of the institutional context in which actors operate. Rather than preventing change until an explosion of radical change occurs, institutional frictions may also allow for successive adjustments over time. They may in fact allow for a gradual release of pressure, thereby preventing the impending explosion.
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