No more credit to Europe? Cross-border bank lending, financial integration, and the rebirth of the national scale as a credit scorecard

The Eurozone crisis that erupted in 2008 has raised sincere doubts about the durability of political and financial linkages among its member states. This paper associates the resulting political economic stasis of the Eurozone with the coevolution of the financial and monetary system at the European scale. The argument builds on insights from financial geography, cultural political economy, and sociology of finance. It focuses on the idea that financial market rationalities, which fluctuate over time and space, are socially constructed through an interplay of acts of 'bricolage' by state and market actors. We relate these rationalities to the main European initiatives regarding financial and monetary integration since the 1992 Maastricht Treaty. By tracing the geographical patterns of cross-border lending of European banks in the period 2003-10 we observe that two radically different rationalities of 'sound investment' have dominated before and after the crisis. In the precrisis conjuncture of convergence, the Eurozone seemed to develop 'according to plan' where the financial system appeared beneficial in terms of equalizing development. However, since the crisis there has been a conjuncture of 'contagion' in which country-level specificities increasingly determine creditworthiness. Meanwhile, we observe that European policy makers try to refit the monetary system to this new market rationality to make the European scale 'perform' again.