"The European Union (EU) institutional framework for financial stability has been redesigned three times since 2000. The financial crisis (2008-2009) and the European debt crisis (2009-) both triggered reforms. The first analytical task of this thesis is to gauge these processes of redesign, and for this purpose I establish three analytical dimensions to assess financial stability frameworks: the level of aggregation, the level of governance, and the functional scope. The second equally important task is to expose why EU Member States tend to mostly agree on piecemeal institutional reforms that may result in crises, without ever addressing the root of the problems associated with financial stability. In order to make progress on this explanatory task I develop a revised ‘failing forward' argument to uncover the decision-making logic resulting in these incomplete outcomes. It is based on Jones, Kelemen, and Meunier's (2015) original argument that attempts to reconcile the grand theories of European integration – liberal intergovernmentalism and neofunctionalism. Intergovernmental bargaining drives the outcome towards the lowest common denominator as Member States have to compromise with the least forthcoming governments. Incomplete solutions lead to new crises, and a functional demand for more integration in a sequential cycle. However, in contrast to original argument, I argue that the decision-makers might not necessarily fully understand the risk of piecemeal reforms. Development of the institutional frameworks are based on learning from previous policies. Based on process-tracing of the three reform processes, I find that social learning expands the policy options available for the decision-makers in each phase. The impact of the lowest common denominator bargaining dynamic increases as the policy options expand. Traces of learning are most clearly visible on issues and dimensions that are directly related to economic theory, such as determining the appropriate level to regulate, micro or macro. The Member States negotiate primarily over the level of governance. The evolution of the EU financial stability framework demonstrates that learning is problem- and crisis-driven, and that the pitfalls of intergovernmental bargains become more prominent on controversial issues. Theoretically, this thesis contributes to the integration theory field by revising the failing forward argument to fit a broader set of cases, in addition to the theoretical standard for financial stability frameworks. Politically, it pinpoints structural obstacles to financial stability."

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