Friday, March 14, 2014
Senate (Omni Shoreham)
This paper presents an unexplored relationship between banks, the systemic
shift to market-based finance and states’ fiscal policy constraints in the European financial
crisis. We argue that in the absence of central bank support, sudden stops in cross-border
finance forced Eurozone governments to adopt fiscal consolidation. Our main claim is
that fiscal policy convergence in these countries cannot be fully understood without
analyzing the processes through which a transnational network of epistemic elites
grouped around EU institutions and European banks changed the collateral management
strategies of banks during the early 2000s, an intervention that ignited a run on sovereign
bond markets after 2010. In the specific institutional context of the European monetary
union, this systemic
shift to market-based finance and states’ fiscal policy constraints in the European financial
crisis. We argue that in the absence of central bank support, sudden stops in cross-border
finance forced Eurozone governments to adopt fiscal consolidation. Our main claim is
that fiscal policy convergence in these countries cannot be fully understood without
analyzing the processes through which a transnational network of epistemic elites
grouped around EU institutions and European banks changed the collateral management
strategies of banks during the early 2000s, an intervention that ignited a run on sovereign
bond markets after 2010. In the specific institutional context of the European monetary
union, this systemic
