Lessons from the Financial Crisis: Is National Supervision of International Markets to Blame?

Due to rising interrelationships between markets, domino-effects and contagion have spread the financial crisis into the European Union. While cross-border flows and international integration of financial institutions and markets grew considerably, supervision mainly remained on a national level. Was this mismatch between financial flows and financial supervision a catalyst or a trigger for the 2008 financial crisis? Based on reviewing research on past crises and descriptive data, we explain why the lack of cross-border financial market supervision might have been one of the reasons behind the crisis touching the EU. We see the creation of the European System of Financial Supervisors as major step forward and suggest stakeholder analysis to mitigate possible conflicts of interest between the EU and the national objectives.