Jörn-Carsten Gottwald Department of Political Science University of Trier / Germany Email:
[email protected] The Regulatory State and Financial Services: An Appraisal of Recent Developments in the European Union Paper presented at the ECPR Conference Budapest 2005 Section: Regulation in the Age of Governance Panel 3 12: the European Regulatory State Preliminary Draft – please do not quote Abstract Since 1998 the regulation of financial services in the European Union has experienced dramatic changes. Following an initiative by representatives of the European Commission and some financial services enterprises the EU shaped and implemented a Financial Services Action Plan. Following the recommendations of a Committee of Wise Men chaired by Alexandrre de Lamfalussy the EU established a new regulatory framework with serious consequences for the distribution of power among major actors, the legitimacy of EU decision-making and the possibilities for member states to pursue their own regulatory policies. Based on a qualitative public choice interpretation of Giandomenico Majone’s regulatory state approach this paper analyses the new regulatory state and its impacts. It argues that as a result of a private initiative the Commission established herself and new comitology committees as major regulators. While national governments succeeded in safeguarding their position, the EP and especially the national legislative bodies suffered a loss of control and influence. Especially the organisations of statutory regulation have gained importance in the new regulatory state. While the Lamfalussy process brought a new level of transparency and new opportunities for the participation of non-state organisations in the arcane world of financial market regulation, its overall legitimacy remains questionable.