Denmark Mulls To Become A Part Of EU Banking Union

18 Sep 2012

Denmark plans to join the newly proposed EU banking union. The banking union will have 17 Euro zone countries.

The Danish national bank and the economy minister of Denmark have supported the joining agenda. As per European Commission's proposal, the proposed banking union will have a control and will monitor the activities and take the responsibility of the 6,000 banks in 17-countries.

Ten non-Euro countries including Denmark will not be a part of the union, but most of them are willing to join if it would bring stability across the banking firms.

CEO of Nationalbanken, Nils Bernstein said: “If [the union] is established, it could easily strengthen trust in the European banking sector which would be difficult for Denmark to stand outside of. From this point of view, it's important that we engage constructively with the negotiations of the proposal.”

The new banking union will help monitor banks and also will take steps to avoid any other banking crisis in future.

Danish economy minister Margrethe Vestager (Radikale) said “It’s actually rather tricky. The way that the proposal has been made means it follows the ECB’s rules. This means that only Euro countries have influence. And they actually cannot simply invite us to have influence.”

He added “We have to consider the ability for Danish banks to compete. If we don't join then we risk higher interest rates that would be passed onto consumers."

Europe’s ability to ward off another financial crisis was strengthened last week when the €500 billion bailout fund was implemented. This was cleared by the European Stability Mechanism (ESM). This bailout fund was approved when Germany’s constitutional court dismissed a challenge that would have resulted in prevention of the fund.

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