The liberalisation of capital movements and financial services in the European single market: A case study in regulation

Abstract. The creation of a common market in capital is a basic component of the European Community's single market programme. This article provides an explanation of the factors which have shaped the single market for capital in terms of three 'perspectives' which supplement each other and which collectively provide a substantive explanation. These perspectives include: (i) the policy requirements and politico-economic context of the single market programme; (ii) the complex and multi-faceted nature of regulation in the financial services field; and (iii) the political balance of power between the national, EC and international agencies involved in financial regulation. Each of these three perspectives contributes salient insights unavailable to the other two. Collectively they provide an explanation of how the liberalisation of capital movements and financial services has actually involved creating a more sophisticated regulatory order rather than simply reducing the volume of regulation.