The banking union would probably work well for Sweden

News, Consultation responses It is positive for the stability of the European financial markets that banks in the banking union are subject to joint supervision and resolution. Swedish banks have extensive cross-border activities, primarily within the EU. This means that the EU’s single supervisory and resolution mechanisms are more appropriate for the Swedish banking sector than the equivalent national mechanisms. The Riksbank’s overall assessment is therefore that conditions are good for the banking union to work well for Sweden. These comments are made in the consultation response the Riksbank is submitting today to the Inquiry on the banking union. However, the Riksbank also points out that the decision on whether or not Sweden should participate is one to be made by the politicians.

The Riksbank essentially supports the Inquiry into the banking union’s analysis and welcomes the fact that the issue has been analysed so thoroughly.

The Swedish banking sector has extensive international operations, primarily within the EU and in particular in the Nordic-Baltic region. This means that single supervision and resolution within the EU is better suited to Sweden's banking sector than national supervision and resolution. If Sweden were to take part in the banking union, we would be able to benefit from the competence and experience built up in the EU single supervisory and resolution mechanisms. Moreover, there is an ongoing harmonisation of the regulations within the EU, and this means that there will be less scope for national special solutions, irrespective of a possible participation in the banking union.

However, the Riksbank does not take a stance on the issue of whether or not Sweden should participate in the banking union. This decision must be taken by politicians and requires many different advantages and disadvantages to be weighed up. The political considerations include an assessment of whether the conditions for a non-euro area country are sufficiently good for participation in the banking union on the same terms as euro area countries. There are also questions that may need clarifying before a potential decision on joining the banking union is taken. One such question is what possibilities a country within the banking union has in a crisis to provide government support to a bank.

Deputy Governor Henry Ohlsson entered a reservation against the overall assessment in the consultation response, see the separate statement.

The banking union

The banking union is a structure – an institutional framework – for organising the work on supervision and crisis management of banks within the EU. The ECB exercises direct supervision over significant banks, and a Single Resolution Mechanism is responsible for crisis management. The Single Resolution Mechanism manages a single resolution fund that can lend money under strict conditions to banks in distress. Participation in the banking union is obligatory for the euro area countries and voluntary for other EU member states.

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Updated 23/04/2020