Bridging Divergence and Convergence in U.S.-EU Financial Regulation

This symposium issue seeks to harmonize international financial regulation by comparing and critiquing U.S. and EU approaches, including their convergences and divergences and the reasons therefor. To achieve this goal, the issue introduces a somewhat innovative approach: each article is co-authored by leading U.S. and EU financial regulation scholars. The divergences in the U.S. and EU financial regulatory frameworks might be explained, at least in part, by the differences in the structure of their financial systems: the United States is primarily market-based, whereas the European Union is largely bank-based. 1 For example, approximately 80% of corporate financing in the United States is funded through the capital markets, compared to only 30% in the European Union. 2 Another possible explanation for the divergences is that EU regulators and the European Central Bank have been more willing to impose top-down policy than their U.S. counterparts, which tend to rely more on voluntary, market-led efforts. Recognizing these differences, this symposium issue's comparative analyses should help the United States and the European Union learn from each other's regulatory successes and failures. That, in turn, should help identify "best practices" and increase regulatory efficiency. The comparative analyses should also further economic growth by increasing U.S. and EU regulatory convergence, building trust, and encouraging cross-border market access and business relationships. The demand for such crossborder access and business is increasingly critical with the expansion of crypto-assets and decentralized finance (DeFi), which transcend geographic boundaries. Regulatory convergence should also increase legal certainty, reduce regulatory risk, lower compliance costs, and facilitate more cooperative cross-border regulatory supervision. Additionally, such convergence could provide more common crisis.