The Lamfalussy Process and EU Bank Regulation: Another Step on the Road to Pan-European Bank Regulation?

Abstract

This article focuses on the Lamfalussy process's accelerated method of lawmaking in financial services within the European Union. The first section of this article provides background information on the economic importance of the banking industry in a nation's economy, and the resulting hesitancy of nations to cooperate in international bank regulation. The second section describes and analyzes the Lamfalussy process. The third section analyzes recent assessments of this new legislative process and discusses implementation issues that have arisen during its short life. Finally, I argue that the Lamfalussy process is merely another step in the trend of greater financial integration and regulatory convergence within the European Union. The next step in the integration of financial services markets in the EU may be the creation of a dual banking system similar to that of the United States, where national banks and state-chartered banks operate under two separate, but related, bodies of law. While not an ideal solution, a Europeanized dual banking system is a likely next step in light of the failed ratification of the Constitutional Treaty and the resulting hesitancy and inability to create new European Union wide programs and institutions.