Muscle Matters: An Integrationist Turn in Transatlantic Finance

After the Great Financial Crisis of 2008, the United States (U.S.) and the European Union (EU) issued new domestic rules across a variety of financial services. Different politics and policy-making processes generated regulatory incompatibilities, and conflicts emerged as each side insisted the other adapt to its approach. Yet our original data covering eleven sub-sectors show that in a predominant cluster of cases, the two jurisdictions had by 2020 made adjustments and adopted integrationist regulation, which fosters cross-jurisdictional interoperability for financial companies through harmonization (increasing similarity and compatibility) or deference (accepting the regulation of other jurisdictions). The pattern has broad and surprising implications for the future of global finance in an era of rising economic nationalism and populist politics. Why, then, did Washington and Brussels move beyond the standoffs? What accounts for the integrationist turn? Our novel explanation features a “mutual accommodation” causal mechanism driven by the development in both jurisdictions of “border-policing” capacities, builds on a new generation of IPE research that is attentive to complexity and temporal process in accounting for global governance outcomes, and provides a pathway for qualitative researchers seeking to balance many new methodological and transparency demands.