Power politics and the undersupply of financial stability in Europe

This article analyses the politics of banking and fiscal union in the EU in the context of continued threats to financial stability in Europe. Contrasting the expectations of functional responses and power politics, it finds that the behavior of the states and the outcome of negotiations most closely resembles contemporary realist expectations. Minimal supranationalism takes place to prevent complete collapse, but the main development is that financially powerful member states coerce and impose changes on weaker member states, without committing to the financial transfers that the latter require to survive the financial crisis, with negative consequences for European financial stability