The EU’s post-2008 financial reforms have coalesced in two major projects: European Banking Union and Capital Markets Union. Both initiatives envision more harmonization of regulatory standards across borders, closer European supervision of national financial actors, and the general transfer of many oversight responsibilities to the supranational level. However, Banking Union has progressed far further than Capital Markets Union – due in no small part to British wariness of Brussels exerting influence over its competitive and dynamic capital markets. The goal of this paper is to determine whether Brexit is a case of “addition by subtraction” for European financial regulators: in other words, does the elimination of British influence make it more likely that we will see further harmonization and supranationalization of European financial governance? This paper examines these two efforts at financial reform, identifying where (and if) Britain exercised an effective veto on European policy – or demanded concessions that would trigger vetoes from elsewhere. It will conclude by assessing whether the long-run prospects of both Banking and Capital Markets are helped or hindered by the prospect of Britain’s exit from the EU.
