The Challenges of Multi-Level Coordination in Post-Crisis Banking Regulation

Abstract

After the international financial crisis, new financial regulations were adopted at the international, regional (EU) and national levels. The timing, the sequencing and the interaction of reforms at different levels followed distinct patterns, which had implications for the design and the coherence of the rules. Despite the proliferation of new and amended international standards in finance, there are no formal mechanisms in the EU to ensure regulatory coherence in the multi-level, multi-venue regulatory dynamics observed in this sector. To shed light on this issue, we investigate the setting of rules on loss absorbing capacity (LAC) for banks, which is one of the main recent areas of post-crisis reform. We expect that regulators will play a key role in the quest for coherence in finance. The central hypothesis investigated in this paper is that they are better able to secure regulatory coherence when they have considerable rule-making competences.

Keywords: Eurozone, Financial Crisis, Loss Absorbing Capacity, Multi-Level Coordination, Banking Regulation