Governing the EU financial markets

The regime of financial market governance in the European Union evolved from generic comitology 15 years ago into one of the most specialized sectoral regimes today. The initial Lamfalussy reform focused on producing better hard law through open and transparent consultations and supporting its consistent implementation by delegating soft law powers to supervisory committees with independent expert capacity. Under the de Larosière reform, committees were transformed into European Supervisory Authorities and their soft law guidelines ‘hardened’ into binding technical standards, which later formed the Single Rulebook pillar of the banking union. The successive reforms improved the procedural effectiveness of rule-making, but it is too early to evaluate their effects on implementation because of constant changes. Reforms also made the regime of governance more open and transparent and thus potentially more inclusive. However, the technical nature of financial regulations and the fact that many decisions are made on the global level conspire against improvements in the democratic legitimacy. The reforms thus shifted power toward expert industry insiders.