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Transnational feedback, soft law, and preferences in global financial regulation

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  • Abraham Newman
  • Elliot Posner

Abstract

Pre-crisis global governance of finance was marked by considerable preference alignment between the two regulatory great powers, the US and the EU. The article's explanation of this surprising pattern in regulatory preferences takes the institutional context of global finance seriously. It highlights the endogenous, temporal effects of inter-national institutions at the core of global economic governance: transnational regulatory networks and the soft law they produce. Transnational soft law is not simply an articulation of a focal point, we demonstrate, but also a political resource that may be employed by reform-minded agents dissatisfied with their domestic policy status quo. We label such feedback processes ‘templates-as-disruptors,’ meaning that the establishment of transnational soft law by regulatory networks at t 1 creates policy templates that disrupt pre-existing internal (e.g. domestic) political contests at t 2 . In addition to improving an understanding of historical events and great power preference alignment, the paper highlights the temporal effects of informal cooperation and domestic--international interaction in global governance.

Suggested Citation

  • Abraham Newman & Elliot Posner, 2016. "Transnational feedback, soft law, and preferences in global financial regulation," Review of International Political Economy, Taylor & Francis Journals, vol. 23(1), pages 123-152, February.
    • Handle: RePEc:taf:rripxx:v:23:y:2016:i:1:p:123-152
    DOI: 10.1080/09692290.2015.1104375
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    References listed on IDEAS

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    1. Jonathan Story & Ingo Walter, 1997. "Political Economy of Financial Integration in Europe: The Battle of the Systems," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262692031, December.
    2. Daniel W. Drezner, 2007. "Bringing the Great Powers Back In, from All Politics Is Global: Explaining International Regulatory Regimes," Introductory Chapters, in: All Politics Is Global: Explaining International Regulatory Regimes, Princeton University Press.
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    Cited by:

    1. Zdenek Kudrna & Patrick Müller, 2017. "Harmonizing Internationally to Harmonize Internally: Accounting for a Global Exit from the EU's Decision Trap," Journal of Common Market Studies, Wiley Blackwell, vol. 55(4), pages 815-831, July.
    2. Lucia Quaglia & Aneta Spendzharova, 2017. "Post‐crisis reforms in banking: Regulators at the interface between domestic and international governance," Regulation & Governance, John Wiley & Sons, vol. 11(4), pages 422-437, December.

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