Brussels, 04/05/2015 (Agence Europe) - A report published by the Danish justice ministry says that there is no need for a compulsory referendum on whether Denmark should join Banking Union, which transfers the supervision and winding up of big European banks to European level.
The justice ministry's report aims to feed the current debate. It says that Denmark joining Banking Union would not lead to a draining of sovereignty from Denmark to Europe and therefore would not require the holding of a referendum.
The Danish social democrat government makes no attempt to hide its desire to join Banking Union, although the upcoming elections (in the autumn) means that it takes a cautious line on European issues. In a press release published on Thursday 30 April, the government says: “The strengthened cooperation on banks contribute to financial and economic stability which will benefit Denmark. We believe it would be beneficial to take part in this strengthened cooperation. We will make our decision on the issue when we see how the cooperation works in practice.”
During the compiling of the report, the Danish authorities were in contact with the ECB and its supervisory board that directly supervises the biggest banks in the countries involved in Banking Union (see EUROPE 11150). The ECB points out, however, that no non-euro country has yet requested to enter close cooperation with the ECB with a view to joining Banking Union.
If Denmark were to make such a request, a preparatory process of at least five months would then begin during which an agreement between the ECB and the Danish Central Bank would be drawn up. The Danish government would have to pass legislation to ensure that supervision decisions taken by the ECB are legally binding and enforceable and that all the information on the supervised banks in Denmark that the ECB might require for its assessment is supplied.
At the end of April, the chair of the supervisory board at the ECB, Danièle Nouy, called for 'incentives' to get non-eurozone countries to join Banking Union because a strengthening of Banking Union, which is currently reserved for the eurozone, would boost financial integration (see EUROPE 11303).
Extension of Banking Union to non-euro countries is problematic in that countries that are not in the single currency would have decisions made for their banks by an ECB body whose decision-making powers are restricted to the eurozone. (Mathieu Bion)