Transnational Veto Players and the Practice of Financial Reform

Policy processes in transnational settings are shaped by actors whose approval and consent are required for reform to take place. These ‘transnational veto players’ frame and delimit policy options. The concept of ‘transnational veto players’ is developed through an empirical analysis of global reforms in the regulatory treatment of large financial institutions deemed ‘too big to fail’. Actors debating and developing policy on ‘too big to fail’ may have formal defined constituencies, as regulators, academics or lobbying organisations, but in their transnational interactions they are also informed by a diffuse constituency of peers through their multiple associations within policy communities. These interactions determine which policy ideas are permissible and how they are adopted. The ‘too big to fail’ case shows how reform activity to curtail the risks posed by large financial institutions may also inadvertently strengthen their position as transnational veto players.