Themulti‐agenciesdilemma of delegation: Why do policymakers choose one or multiple agencies for financial regulation?

Abstract

The article asks the following question: Why do policymakers choose one (or more) agent(s) to perform new delegated policy functions? In order to shed light on the factors that drive policymakers' choice of a single or a multiple agencies delegation framework, the article investigates policymakers' choice to delegate macroprudential regulatory responsibility to either the central bank or to a committee made up of more than one financial regulator. Based on the analysis of an original dataset in 53 countries, we show that the choice among alternative delegation frameworks is driven by the logic of "policy control": policymakers, who want to control policies with distributive consequences, choose the single agency model under conditions of political uncertainty and low agency independence.

Between technocracy and politics: How financial stability committees shape precautionary interventions in real estate markets

“…In the EU, the supranational dimension introduced an additional complication. On the one hand, reforms to install the macroprudential policy framework have empowered central banks, prime examples of independent technocrats (McPhilemy, 2016; Moschella & Pinto, 2021). Many countries tasked their central banks with the lender‐based macroprudential instruments contained in the new EU banking rules: the Capital Requirements Directive (CRD) IV and the Capital Requirements Regulation (CRR).…”

“…While many EU member states introduced them in national legislation, they were often placed outside of financial supervisors' purview (Hartmann, 2016). This follows a general trend: as macroprudential policy has potentially significant distributional consequences, politicians have been reluctant to fully exclude themselves from the decision‐making process (Edge & Liang, 2019; Moschella & Pinto, 2021).…”

“…As such, the literature's main focus is on regulatory agencies' degree of independence, not their direct collaboration with political actors (Benoît, 2021). 2 The literature thus roughly posits two institutional forms to deal with such issues—delegation to experts, or the retention of political control—and explores the reasons for either choice by politicians (Moschella & Pinto, 2021). Post‐crisis macroprudential reforms, however, have resulted in institutional frameworks that often do not fit easily in either category (Edge & Liang, 2019).…”

“…1 1 Moschella and Pinto (2021) report that 36% of the countries in their sample of 53 countries have made these committees formally responsible for macroprudential policy, and in the EU, 12 of the 27 member states have done this. …”

States and Experts: Assembling Expertise for Climate Change and Pandemics

“…Authority is not only reflected in the legal and bureaucratic opportunity structures defined by policymakers but also their relationships to an expert system and the social environment in which they act. Such beyond state environments may also prove important in 'multi-agencies dilemma of delegation' scenarios (Moschella & Pinto 2021). Highlighting sources of authority through legitimacy in politico-administrative and expert systems is necessary to further our understanding of the dynamics of regulatory reform as well as the sources of authority for non-democratic regulatory organizations.…”