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.

Chapter 12: Inclusion: Universal Access, Consumer and Workers’ Protection

Jörg Huffschmid

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


Jörg Huffschmid INTRODUCTION 12.1 Experience has shown (see Chapter 10) that the potential benefits of large integrated financial markets do not automatically occur and that where they do occur they often do not reach society as a whole but only specific privileged groups. Enlargement of European markets for retail finance could lead to selective supply and cherry-picking of attractive crosscountry business opportunities and the neglect of those areas which were – although less profitable – previously covered in a domestic framework. Opening up of markets could also trigger more concentration and centralization to cope with more intense competition and to establish stronger market positions of national champions, which could exploit such positions against weak and vulnerable customers such as individuals and small businesses and farmers. Full liberalization of capital markets will also facilitate capital flows to the most profitable locations without concern for the consequences of job losses, deterioration of work conditions or of closures and relocations for the workers, communities and regions concerned. For all these reasons, political measures are needed to ensure comprehensive instead of selective positive effects of financial integration. Financial institutions and their associations on the national and European level often argue that instead of legislative measures (the implementation of which requires a great amount of bureaucracy) selfregulation should be preferred, which would lead to simpler and more efficient solutions for everyone. But where self-regulation includes all the stakeholders, including consumers, communities and workers, it is often very general and inefficient. The kind of self-regulation which can...

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