Divergence or Convergence? State Regulation of the Banking System in Western Europe and the United States

The simultaneous processes of globalisation and European integration have rekindled the interest in the role of the nation state. But this debate is an ongoing one, as participants cannot agree whether this will result in the “erosion”, “decline” or even “the end” of the nation state, or, quite to the contrary, in its“revival”because of“new tasks” for it, exposing ideas about the “powerless state” as a “myth”. One reason for this stark disagreement, the paper argues, is that theoretical considerations offer two different perspectives and dynamics for an interpretation of that process, and consequently expect different outcomes: one sees an overwhelming pressure for policies to converge (and hence reduce the role of the individual nation state), the other expects exactly the opposite, namely a continuing or even mounting divergence of policies (and thus a continuing or enhanced role for the individual state). The paper spells out these different positions in greater detail and then goes on to argue that only empirical evidence can resolve the debate. The empirical part of the paper draws on four detailed case studies which have followed the course of banking regulation in the US, the UK, Germany and Switzerland. Their main result is that both initial positions have to be modified, and that domestic institutions function as strong “filters” for globalisation, producing quite different policy dynamics and outcomes in the four countries.