Stalled by design: New paradoxes in the European Union’s single financial market

Dóra Piroska, Rachel A. Epstein

Research output: Contribution to journalArticlepeer-review

Abstract (may include machine translation)

Since the US financial meltdown in 2008 that sparked a Eurozone crisis, the European Union has introduced new financial market initiatives that were intended to advance integration, bring stability, and create shared prosperity for EU members. Innovations included Banking Union, Capital Markets Union, and the European Fund for Strategic Investments. We find, however, that tensions between supranationalization and retaining national control in institutional design diminished incentives for full participation, particularly among the EU’s East Central European members. Uneven levels of foreign bank ownership between East and West Europe, disparities in the depth of capital markets, and varying institutional capacity have often led Eastern member states to opt out. Paradoxically, initiatives intended to advance integration and overcome developmental inequalities have instead compounded national fragmentation and restricted pathways to catching up for some of the EU’s less prosperous members. Thus, European financial integration was stalled by design.

Original languageEnglish
Pages (from-to)181-201
Number of pages21
JournalJournal of European Integration
Volume45
Issue number1
DOIs
StatePublished - 2023

Keywords

  • Banking union
  • EFSI
  • Eastern Europe
  • European Union
  • capital markets union

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