Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

Chapter 2
Regulating financial
capitalism: the EU’s
global responsibility
George Pagoulatos
The 2008 global financial crisis found Europe unprepared. The EU’s
regulatory equipment was intended to address different priorities and
different risks. It was not designed to cope with such serious cross-sectoral
financial contagion and complex cross-border systemic interdependence.
The crisis spread with great intensity and speed, from the banking and
financial sector to the real economy, and from the directly affected subsectors
to a global scale. It proved the proponents of unfettered financial
capitalism wrong and the critics right. Europe should now be entitled to
take the lead from the US in reforming the global financial architecture.
Inside the EU, the argument for a more intelligent regulation of finance
has gained momentum.
The crisis has demonstrated the advantages of the Eurozone financial area
being able to rely on a global reserve currency. Yet, it also reminded us
that the EU and EMU institutional architecture was designed for fairweather
financial conditions, and therefore it was inadequately prepared
to deal with a crisis of such proportions. Crisis-prevention and regulatory
redesign are now gradually replacing crisis-reaction on the EU and global
policy agenda.
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