This paper analyzes major changes in the regulation of the financial sector in Europe over the last three decades. Focusing on the pattern of change across five countries (Britain, France, Germany, Italy and Spain), the paper identifies two major periods of regulatory change: first, the shift away from postwar patterns of credit regulation in the 1970s and 1980s, and second, the intensification of state supervisory powers and the introduction of new regulatory structures from the 1990s to the present. In both cases, the authors point to the way in which different models of financial sector regulation affect the political consequences of macro-economic policy for political elites as an explanation for choices that governments have made in the regulatory arena. More specifical-ly, while regulatory change in the first period may be largely explained by the way in which dif-ferent postwar models of credit regulation impinged upon a government's political ability to im-pose disinflation, choices in favor of different regulatory structures in the second period (single regulator in Britain and Germany versus multiple regulators in the other countries) can be related to differences in the area of pension reform. By focusing on the political implications that differ-ent modes of financial regualtion can have for elected officials in the context of different macro-economic scenarios, the authors offer an explanation of regualtory change that differs from ac-counts which emphasize the primacy of financial market forces in driving such change.