This chapter analyses the policy-making process for bank capital adequacy standards, focusing on the interaction between the European and global levels. It traces the emergence of supranational standards from the European Community’s First Banking Coordination Directive in 1977 through the Basel Capital Accords to the current EU’s Capital Requirements Directive IV. This chapter demonstrates how the EU functions as an intermediating variable influencing preferences of private and especially public actors. And it explains how and why public policy-makers are not always prey to regulatory capture. The negotiations on bank capital adequacy standards take place in exclusionary policy-making forums, leading to skewed argument pools. As a result, policy-makers have developed shared assumptions including the superiority of market mechanisms and the desirability of levelling the playing field.
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