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This chapter provides an overview of financial integration and regulation. It discusses the main issues at stake in the political economy of financial integration and regulation in Europe. Due to the recurrence of financial crises, the globalization of finance, the multi-level governance of financial services, and the large size and far-reaching influence of the financial sector, financial integration and regulation hold particular significance in the European political economy. Over time, financial integration increased in the European Union, which has harmonized regulations on a variety of financial services across Member States. The financial integration and regulation in Europe face several ongoing and future challenges, such as the incompleteness of the Banking Union and its asymmetric functioning.

After twenty years of continuous deepening and widening, European integration has entered an era of recurrent crises. Most students of the European Union (EU) seem to agree that the constitutional equilibrium between intergovernmental and supranational institutions has changed. Some see ‘new intergovernmentalism’ and ‘integration without supranationalization’ prevailing. Others contend that we are witnessing a series of functional and institutional spillovers empowering supranational institutions. This chapter argues that governance approaches are particularly useful to address the puzzling counter-positions represented in the current debate about the ‘nature of the beast’. They are better equipped to explore how and to what end institutional structures and processes have responded to the crises than mainstream integration theories. The chapter starts with introducing the ‘governance turn’ in EU studies as the attempt of EU scholars in the early 1990s to capture the nature of the EU. It then presents a typology that is based on a broad concept of governance as institutionalized forms of political coordination. The empirical part of the chapter uses this typology to give an overview of the structures and processes of EU governance before applying it to the financial and the migration crises. The chapter concludes with a discussion of the major challenges for European integration (theories) from a governance perspective, particularly with regard to managing current and preventing future crises.