The role of the EU institutions in establishing the banking union. Collaborative leadership in the EMU reform process

Abstract

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.

Death in Veneto? European Banking Union and the Structural Power of Large Banks

“…Liberal intergovernmentalists tend to emphasize Germany's change of position as a response to the possible costs of break-up of the eurozone (Schimmelfennig 2015), with German interests dictated by the structure of its particular banking sector, notably the network of politically influential private savings banks (Howarth and Quaglia 2014). Those scholars drawing on neo-functional theory emphasize how spillover dynamics stemming from the eurozone crisis strengthened supranational authorities, in particular, the European Central Bank and the Commission, and simultaneously weakened German reluctance to create a banking union (Epstein and Rhodes 2014Niemann and Ioannou 2015;De Rynck 2016;Nielsen and Smeets 2018). Jones, Kelemen, and Meunier (2016) even combine the two modes of explanation into what they characterize as a policy mode of 'falling forward,' in which lowest common denominator intergovernmental deals between powerful states give way to further neofunctionally inspired pressures for integration, which in turn result in new, incomplete intergovernmental deals.…”

Collaborative leadership in EMU governance: a matter of cognitive proximity

“…However, legally as well as in practice, the EU's political system presupposes collaboration across the EU's institutions and their protagonists. Research on the creation of the EU banking union, for example, confirms that interinstitutional collaboration is a central feature of EU policy making (Nielsen and Smeets 2018).…”

“…As such, the European Union can best be understood as a leaderful environment (M€ uller and Van Esch 2019). Although scholars agree that no single centre of leadership exists in the EU, the topic of collaborative leadership has only recently gained traction in European studies (Nielsen and Smeets 2018;Smeets and Beach 2019).…”

The contested nature of political leadership in the European Union: conceptual and methodological cross-fertilisation

“…Other European institutions whose leadership has been studied include the European Central Bank (Verdun 2017) and the European Parliament (Judge and Earnshaw 2008;Wilson et al 2016). Finally, the effects of EU collaborative leadership have also been the object of study (Nielsen and Smeets 2018).…”