Inside the Internal Market, Outside the Banking Union

Abstract The EEA Agreement allows Norway, Iceland, and Liechtenstein to participate fully in the EU internal market, including applying the four freedoms and nearly all EU financial services legislation. This chapter analyses how the EEA/EFTA transposition process—and the only partial integration into the EU’s regulatory structure—shapes the internal market. The EEA/EFTA states access EU financial markets and follow EU rules but lack influence over EU rule-making. Structural challenges persist, including delays in incorporating secondary legislation, reluctance to apply internal market law in full, and a widening domestic margin of appreciation, all reflected in domestic legislative and administrative practice, and in domestic case law, also being fought out in the EFTA Court, on issues from e-payments to financial instruments. These tensions are intensifying as EU integration deepens, most recently with the 2025 Savings and Investments Union strategy. The EEA/EFTA model highlights differentiated integration and alternative pathways for non-EU states seeking market participation.