In the summer of 2011, the European Commission issued a proposal to recast the EU legislative framework on bank prudential requirements, known as the ‘Capital Requirement Directives’ (CRD), in order to integrate into EU law the new, post-financial crisis international agreement on bank regulation and supervision known as Basel III. Among the defining features of this so-called CRD IV package was the aim to create a ‘Single Rulebook’ for banking in the EU, with most of the rules now contained in a regulation instead of a directive. The final text did replace with a single set of EU rules the previous mosaic of national laws and fully harmonized the key elements of the legislative framework, but still it left national regulators and supervisors with many options and national discretions. This paper examines the process leading to such a compromise between integration and national discretion and sees in the recent adoption of a formal international regulatory framework, Basel III, a potential explanation, despite its relative softness. This paper argues that, by making a strategic use of this external constraint during the negotiation of CRD IV, the European Commission, supported by the most internationalized parts of the banking sector, were able partially to diffuse pressures arising from reluctant financial interest groups and member state governments asking for national discretion and advance its own agenda of further harmonisation in European banking.
