Trust Matters in the Single Market, but How? Analysing Trust Amongst European Financial Supervisors

Abstract

European regulatory co-operation has become essential for the smooth operation of the single market, and this in turn requires trust. In the case of the European Union (EU) ‘Undertakings for Collective Investment in Transferable Securities’ (UCITS) Directive, for example, the member states' financial supervisory authorities rely on each other to provide a harmonised regime for the sale of investment funds across the EU. Funds authorised in one member state can be sold freely in another member state without further authorisation. The national authorities need to trust each other to ensure a consistent application of EU law. Yet we know very little about how trust matters from the perspective of member state regulators. In this article, we provide a better understanding of the relevant components of trust in the single market in financial services through an in-depth case study of an EU network of national financial market supervisory authorities.