The Politics of Financial Regulatory Reform in Britain and Germany

Abstract

Over the past decade, Britain and Germany have both made fundamental changes to their financial regulatory regimes with the creation of single powerful regulators. In both cases, this meant either ending or severely limiting the regulatory role of central banks. This article argues that the creation of these new regulatory actors cannot be understood without reference to the preferences of domestic political actors responding to the increased political salience of financial regulation as a policy issue. The result was distinct partisan differences about institutional design and responsibilities with centre-left parties seeking regulatory actors clearly accountable to government and parliament. Such an account of institutional change is in contrast to previous accounts of the evolution of financial regulation that are largely exogenous to domestic politics.