Regulators in a large number of European countries have been working for over 20 years with legislators to harmonize their sundry and diverse rules and regulations. In Europe, the 1996 Banking Directive (DSI) is undergoing serious revision. If each regulator located in the 16 European countries harmonizes the current regulations, it is possible that throughout Europe intermediaries will soon be applying principles from the same rule book. Rather unfortunately, experience goes to show that this will take some time. The rule adopted in Europe allowing for a measure of integration is basically that of the single passport. It gives a financial intermediary under the supervision of a ‘‘home regulator’’ the right to operate throughout Europe. He (or she) is monitored by the latter and at the same time has got to respect the rules of the country in which he carries out his transactions. The regulatory host and the home regulator recognize each other’s competency in their respective fields of intervention. This is all rather complicated, but it works. As of now, the one truly cross-border regulated market in the world is European: Euronext, a market covering France, Belgium, the Netherlands, Portugal and Scandinavia.
It is obvious that the power of a state, with its rules and regulations, confronts market globalization with a stumbling block. This is the case even in an area such as Europe that is fully committed to integration. The supremacy of markets over governments is a shibboleth; it has been vocally contested in many places. It has precious little to do with everyday economic reality.