Since the 2008 financial crisis, Europe's largest banks have largely remained unchallenged. Is this because of the structural power banks continue to hold over states? This article challenges the ...view that states are sheer hostages of banks’ capacity to provide credit to the real economy—the conventional definition of structural power. Instead, it sheds light on the geo-economic dimension of banks’ power: key public officials conceive the position of “their own” banks in global financial markets as a crucial dimension of state power. State priority toward banking thus results from political choices as to what structurally matters most for the state. Based on a discourse analysis of parliamentary debates in France, Germany, and Spain, as well as on a comparative analysis of the implementation of a special tax on banks, this article shows that power dynamics within states largely shape political priorities toward banking at both domestic and international levels.
At the onset of the Greek sovereign debt crisis in early 2010, the French government asked French banks to retain plummeting Greek bonds on their balance sheets. And the French banks did exactly ...that. At around the same time, the German government also asked German banks to retain plummeting Greek bonds on their balance sheets. Yet German banks sold the bonds abundantly. Both governments depended on profit-oriented banks to fulfil a mission of public interest, but neither had formal levers to ensure that banks would do as they were told. Why did the French banks comply with their government's request while their German counterparts did not? Taking advantage of an opportunistic design and building on data gathered in newspapers and through 20 in-depth interviews, this paper argues that banks' decisions are the result of long-term institutionalized state-bank modes of coordination in France and Germany. In France, bankers understood the government's request as being embedded within a long-term relationship of reciprocal favours, which led them to comply. In Germany, state officials resorted to straightforward pressures such as naming and shaming banks. But as soon as the pressure died down, the banks sold out.
As in other countries, regulated savings in France are intricately woven into dense regulatory frameworks driven by explicit governmental objectives. The anticipated marketization of the French ...economy should have eradicated them; however, a substantial portion of regulated savings has managed to evade this process. Is this phenomenon attributable to the tenacious grip of the French state-led tradition? Not entirely, as another subset of these savings has indeed undergone marketization. The landscape of French regulated savings is notably distinguished by a growing dichotomy: on one side, non-marketized products offered by banks, and on the other, increasingly marketized products provided by insurers. Drawing upon process tracing, we contend that these ostensibly conflicting developments emanate from the distinct and precise institutional dependencies between state and private actors in which these products are enmeshed. The prevailing status quo within the banking sector is owed to banks' engagement in a mutually advantageous, long-term exchange of favors with state actors. Faced with the trade-off between offering less lucrative products and risking the endangerment of this relationship, banks have opted for the former. In contrast, an assertive strategy has gained traction in the insurance industry. Yet, strategies for the marketization of regulated savings aligned with state priorities have been implemented, even when insurers expressed opposition.
Many conventional theories in Economics and Political Science stress that the liberalization and globalization of finance have homogenized the behavior of state and market actors. Some even go so far ...as to assume that states have become irrelevant actors. However, these theories cannot account for empirical observations laid out in my dissertation research: that responses to the financial crisis in Europe have largely been crafted at the national level. Since the crisis of 2008, there have been different trajectories of finance across Europe. In France, banks have grown bigger, as they have developed their operations in market-based banking as well as in traditional banking, both globally and at home. In Germany, Deutsche Bank maintained, and even developed, its global market activities until 2014-5. On the other side, local banks have reinforced their incumbent position in domestic retail markets. British banks have shrunk quite dramatically. They have largely retreated from the game of global finance, while foreign financial institutions have continued to use the infrastructures provided by the City of London as a base for their global market operations. Now, which actors dominate the national financial system, and how those actors operate the financial intermediation between surpluses and needs of capital, have important distributive and functional consequences for the whole political economy. I argue that divergent national trajectories of finance result from the differentiated influence of public authorities on banks’ management, through the passing of diverse regulation, through the differentiated enforcement of international regulation, or through direct intervention of public authorities towards banks’ management. For this research, I have led a comparison of 12 financial regulation policies and cases of regulation enforcement in France, German and the since 2008. I have questioned each national version of a financial policy according to whether they tend to hinder/permit/enhance the expansion of large banks, globally and at home. I find that everywhere, states have been pro-active in the shaping of the post-crisis domestic financial landscapes; yet they have promoted very different re-organizations of their domestic financial industries. The divergent priorities of the state towards finance can be explained by different institutionalized modes of coordination between private and public actors across political economies. In France, symbiotic mechanisms of interaction between domestic bankers and government officials have led to the crafting of mutually benefiting compromises in response to the crisis. French state officials have thus to a large extent abided by banks' preferences. Yet, this outcome is to understand in mirror of the reciprocal character of the relationship: in important cases, banks also complied with state's preferences. In Germany, local governments have systematically opposed policies that may have been detrimental to "their" local public banks. On the other side, the urge to promote one German champion in the global financial markets and the deference of state officials towards the expertise of banks' top managers, have led the federal government to abide by the preferences of German largest commercial bank. In the UK, adversarial mechanisms of interaction within and between domestic bankers and state officials have enabled identified public actors to exploit political leverage to the detriment of British domestic banks. I have based my analysis on data collected during more than 100 interviews with a variety of prominent market actors and public officials as well as private and publicly available documentation released by administrative and business organizations. The analysis proceeds through 12 mini case studies of policy-making processes and two more in-depth case studies of the Banking Structural Reform and the management of the sovereign debt crisis of 2010-2011.
The ECB is independent, but it is also accountable to the European parliament (EP). Yet, how the EP has held the ECB accountable has largely been overlooked. This paper starts addressing this gap by ...providing descriptive statistics of three accountability modalities. The paper highlights three findings. First, topics of accountability have changed. Climaterelated accountability has increased quickly and dramatically since 2017. Second, if the relationship between price stability and climate change remains an object of conflict among MEPs, a majority within the EP has emerged to put pressure for the ECB to take a more active stance against climate change, precisely on behalf of its price stability mandate. Third, MEPs engage with the climate topic in very specific ways. There is a gender divide between the climate and the price stability topics. Women engage more actively with climate-related topics. While the Greens heavily dominate the climate topic, parties from the Right dominate the topic of Price stability. Finally, MEPs adopt a more united strategy and a particularly low confrontational tone in their climate-related interventions.
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