Institutional Governance and Capital Markets Union: Incrementalism or a “Big Bang”?

Abstract

This article considers the institutional governance issues raised by Capital Markets Union (CMU). It suggests that the preferences of administrative actors are likely to have a determinative influence on the evolution of institutional governance as the CMU agenda rolls out. Specifically, the incentives, powers, and preferences of ESMA (the European Securities and Markets Authority) are likely to have strong effects on how institutional governance for the EU capital market develops. Member States’ preferences will continue to have a strong influence but this is most likely with respect to whether further centralization of institutional governance in the euro area will occur. The article also considers the likely pace and nature of the evolution of institutional governance for the EU capital market in light of the CMU agenda. It draws on the insights of experimentalist governance and on empirical observation of ESMA’s recent activities to suggest that incremental change, rather than a ‘big bang’ is likely, and that a further but gradual centralization of regulatory and supervisory governance will follow. It remains to be seen whether the CMU agenda injects an accelerating factor into this evolutionary process or, conversely, and by distracting the EU from necessary institutional reforms, disrupts incremental developments.