April 24, 2020 / 11:51 AM / a month ago

Swedish FSA says risks to joining EU banking union

STOCKHOLM (Reuters) - Joining the banking union would create significant economic and political risks for Sweden, Sweden Financial Supervisory Authority said on Friday.

“It is not possible for Sweden to participate in the banking union on equal terms,” the authority said in a statement. “Especially in critical situations, Sweden’s position as a non-euro area country can be of significance.”

The FSAs statement summarized its response to a government consultation process about whether Sweden should join the banking union.

On Thursday Sweden’s central bank said the banks’ extensive cross-border operations meant that it would be appropriate for Sweden to be part of the European banking union, although one of the six governors entered a reservation against the recommendation.

The head of FSA, Erik Thedeen, has previously said that Sweden decision on whether to join the banking union should be linked to a decision on whether to become a member of the single currency area.

At the end of last year, a government commission handed over its thoughts on whether or not Sweden should join and the Social Democrat-led coalition is currently consulting with interested parties such as the FSA and the Riksbank.

At that time, Markets Minister Per Bolund did not give any time frame for the government to make a decision on the banking union.

Reporting by Johan Ahlander; Editing by Simon Johnson

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