INTRODUCTION

The advent of banking union in the EU with the granting of supervisory powers to the ECB, the increased attention given by politicians, legislators and regulators to issues of institutional supervisory design in the US, UK and EU, and the revamping of the financial stability mandate of central banks (with the addition of new macro prudential supervisory powers) are some of the developments that in the aftermath of the financial crisis have brought the issue of accountability back to the fore of legal and economic policy debate.

This paper tries to revisit the theoretical framework for supervisory accountability, an issue which I have amply discussed in earlier writings, in particular in connection with the independence of central banks and other authorities in the discharge of prudential supervision.

As such, the paper does not intend to dwell on the intricate design of the supervisory structure of the single market in the EU (with the ESAs) nor on the three institutional pillars of European Banking Union, but rather it aims to revisit the theory that surrounds the understanding of these issues.

Any discussion about accountability presupposes the existence of power. Though sovereignty – the organising principle of politics in the Western World since the Renaissance – remains a fundamental principle for allocating power, a new principle based on global governance is becoming increasingly relevant in the last decades. Indeed, we have witnessed how the role of the State and the function of governance have been refined and redefined in recent years. In the current process of increasing globalisation, the state is finding it increasingly difficult to enforce its laws against global actors such as multinational corporations and criminal organisations; tax laws and the opportunities that emerge for regulatory arbitrage or forum-jurisdiction shopping are a case in point. Resolving conflicts requires new mechanisms beyond the state's judicial machinery, hence the crescent popularity of arbitration as an alternative dispute resolution mechanism. Furthermore, the dichotomy between global markets and national institutions has influenced the quest for new mechanisms in the resolution of international financial disputes and conflicts. Even in the area of policing, the state is enlisting the private sector in the fight against crime.