Global Finance and Social Europe

Global Finance and Social Europe

New Directions in Modern Economics series

Edited by John Grahl

With global finance reshaping the world economy, this insightful new book provides a full account of the EU’s financial integration strategy, together with a critical assessment arguing the case for social control over global finance. Written by acknowledged experts in European finance, this book discusses key issues from finance to general social developments, encompassing social security systems, employment relations, household saving and borrowing, and the question of economic stability. Thus far, America has been pre-eminent both in global financial markets and international banking – so how should the European Union meet this challenge? Global Finance and Social Europe constructively argues that an active response is required and highlights the importance of an integrated European financial system.


John Grahl

Subjects: economics and finance, financial economics and regulation, post-keynesian economics, social policy and sociology, economics of social policy


John Grahl FINANCIAL CHANGE IN EUROPE The financial systems of European countries are undergoing rapid change. The forces involved can be divided into two main groups. On the one hand, the various developments covered by the term globalization, involving increasing interactions across state borders and increasing interdependence among national systems of all kinds, are particularly marked in the sphere of finance – indeed it is clear that liberalized finance is one of the main forces behind the globalization process as a whole. On the other hand, there is a well-defined response by political leaderships in the European Union who have adopted a strategy of deeper financial integration within Europe – the key element of this strategy in recent years has been the Financial Services Action Plan (FSAP). The increasing importance of financial relations across national borders, indicated both by very large international capital flows and by closely correlated movements in interest rates and share prices across many economies, has made for significant changes in the character of financial systems and in how financial sectors interact with households, governments and corporations. One of these changes is a widespread expansion of financial sectors, which nearly everywhere account for a larger fraction of economic activity. Another, very important, change is a general decline in the ability of governments to influence financial processes – the removal or attenuation of official constraints on financial transactions has been both a cause and a consequence of the increasing internationalization of finance. Although forms of supranational financial regulation have emerged in...