12. Digital Policy-Making in the European Union

Digital technologies are transforming European societies, politics, and markets. Since the 1970s, the European Union has attempted to navigate these pressures through a package of digital policy-making. These efforts have targeted the dual missions of pan-European market-making, as well as market correction. Relying on a host of governance modes including the regulatory method, policy coordination, incorporated transgovernmental networks, and private governance, the European Union has tried to steer the new information society so as to both spur market growth and protect citizens against abuse. The ultimate success of these efforts has been encumbered by the overall complexity of the sector, where policy efforts quickly bleed over into other issue areas, such as competition policy and justice and home affairs, and have international consequences. Digital policy-making in Europe faces considerable challenges ahead, as EU institutions grapple with the rise of platform companies, disinformation campaigns, and transatlantic disputes over data privacy and the market power of US-based technology companies.

International Standards for CCPs

After the crisis, following the mandatory central clearing of derivatives, CCPs became crucial nodes of the financial system. Thus, new rules to improve their resilience, recovery, and resolution were issued. Initially, the division of work amongst international standard-setting bodies was unclear and international standards on CCPs lacked granularity. Subsequently, the division of work was clarified and relatively more precise, stringent, and consistent rules on CCPs were issued. The US and the UK were pace-setters internationally and partial first-movers domestically. The EU had preferences that were largely aligned with those of the US. Transgovernmental networks operating in international standard-setting bodies deployed formal and informal tools to promote regulatory consistency within the elemental regime on CCPs. Finally, financial interests mobilized in a variety of venues with a view towards shaping the content of the new standards on the basis of expected costs and benefits.

International Standards for the Reporting of Derivatives Trades

This chapter examines the elemental regime on the reporting of derivatives trades to repositories, including the harmonization of data format and aggregation, the politically charged issue of authorities’ access to data, and the technical issues concerning entities, products, and transactions identifiers. Initially, international standards for trade reporting were not considered as a priority and different domestic rules on trade reporting proliferated. Over time, relatively precise, stringent, and consistent international standards concerning entity, product, and transaction identifiers (i.e. the LEI, UPI, and UTI) were issued. The US was a first-mover at the domestic level and a belated pace-setter at the international level, with the support of the EU. A variety of transgovernmental networks of domestic financial regulators facilitated the harmonization of trade reporting, together with the International Standardisation Organisation (ISO) and private sector associations. The financial industry accepted the need for trade reporting, but complained about different domestic requirements that increased reporting costs.

International Margin Standards for Non-centrally Cleared Derivatives

The elemental regime on margins for derivatives not cleared through CCPs was added later on to the international regulatory agenda. The US was a pace-setter at the international level and a first-mover at the domestic level in promoting relatively precise, stringent and consistent margin requirements. The EU supported the US international standard-setting efforts, but adopted domestic regulation after international rules were set. There were no foot-draggers, even though several jurisdictions on the fringe were reluctant followers. Domestic regulators gathered in international standard-setting bodies facilitated the ironing out of differences amongst and within jurisdictions. Transgovernmental networks also fostered rule consistency, helping to manage the regime complexity resulting from several interlinked elemental regimes on derivatives. Margins were heavily contested by the financial industry, which mobilized to make them less precise and stringent. Private actors also urged regulators to consider this reform in conjunction with other post-crisis standards, notably, capital requirements.

Who Interacts with Whom? Drivers of Networked Welfare Governance in Europe

Migration is often perceived as a challenge to the welfare state. To manage this challenge, advanced welfare states have established transgovernmental networks. This article examines how domestic factors condition the interaction of representatives of advanced welfare states when they cooperate on transnational welfare governance. Based on new survey data, it compares who interacts with whom in one of the oldest transgovernmental networks of the European Union (EU) – the network that deals with EU citizens' rights to cross-border welfare. First, the authors perform a welfare cluster analysis of EU-28 and test whether institutional similarity explains these interactions. Furthermore, they test whether the level and kind of migration explains interaction and examine the explanatory value of administrative capacity. To test what drives interactions, the study employs social network analysis and exponential random graph models. It finds that cooperation in networked welfare governance tends to be homophilous, and that political cleavages between sending and receiving member states are mirrored in network interactions. Domestic factors are key drivers when advanced welfare states interact.