The European Union and the Regulation of Global Finance under Complex Bipolarity

This paper sets out to better understand the European Union (EU) as a global financial regulator over the last two decades. It carries out a medium-n study, constructing original data that covers 11 financial regulatory areas in both the EU and the US. Two curious empirical trends emerge: the international financial crisis of 2008 ushered in a sustained period of tighter regulation; and the EU adopted ‘internationalist’ rules in a dominant cluster of cases. Our explanation features the evolution and constraining effects of regulatory capacities in the EU and US. Regulatory capacities reflect cross- and within-jurisdictional political contests, separate from those determining rule content. We draw attention to why and how improved border-policing in two powerful jurisdictions is likely to constrain regulatory autonomy in both. Using congruence analysis and a follow-up process-tracing study, we show that our explanation does better than alternatives. These findings suggest a similar logic applies to the US, advances third-wave IPE theory, illustrates how to balance some of the wide-ranging demands on qualitative research, and offers answers to policy-relevant questions about the EU’s role in the governance of global finance and market power in a multipolar world.