In the light of the EU’s crisis management and institutional reform a debate has emerged that centers once more on the question of German hegemony, ranging from the country's bargaining position as the prime creditor state to its neo-mercantilist strategies or the dominance of ordoliberalism. But scholarship has devoted little attention to the institutional mechanisms by which German positions may have altered the political-economic configuration of the Union beyond member state negotiations and mere power politics. Building on the notions of ‘embedded hegemony’ and its components of both ‘structural’ and ‘soft’ power, this paper sets out to investigate the institutional work that is conducted by the ‘reluctant hegemon’. It employs a case study of the emergent field of development banking in the EU and traces the role and activities of the German state-owned bank Kreditanstalt für Wiederaufbau in multi-level economic governance over the past 20 years. It suggests that the bank has occupied a top position both in cross-national institutional cooperation and supranational governance schemes. Emblematic of the asymmetrical power relations within the European political economy, the paper concludes, such institutional work has implications for our understanding of German hegemony in Europe and interstate power relations more generally.
