Abstract
Crises have long been used as a motor for European integration (Jo, 2007). ‘Europe will be forged in crises, and will be the sum of solutions adopted for these crises’, pronounced Jean Monnet to highlight the importance of crises in shaping policy change. Most narratives have focused on how periods of turbulence are used as opportunities to overcome old enmities and political opposition to change policies and institutions (Kühnhardt, 2009). However, crises can also be occasions for decline. Leaders may not draw the ‘right’ lessons and may ultimately create institutions that fail to adequately address the causes and effects of the crisis. What factors explain the institutional reforms observed during Europe’s financial crisis? Institutions are defined as formal and informal rules of behaviour that govern EU macroeconomic and monetary stability.