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(When) should a non-euro country join the banking union?


  • Belke, Ansgar
  • Dobrzańska, Anna
  • Gros, Daniel
  • Smaga, Paweł


We analyze the benefits and costs of a non-euro country opting-in to the banking union. The decision to opt-in depends on the comparison between the assessment of the banking union attractiveness and the robustness of a national safety net. The benefits of opting-in are still only potential and uncertain, while costs are more tangible. Due to treaty constraints, non-euro countries participating in the banking union will not be on equal footing with euro area members. Analysis presented in the paper points out that reducing the weaknesses of the banking union and thus providing incentives for opting-in is not probable in the short term, mainly due to political constraints. Until a fully-fledged banking union with well-capitalized backstops is established it may be optimal for a non-euro country to join the banking union upon the euro adoption. Assessing first experiences with the functioning of the banking union and opt-in countries will be crucial for non-euro countries when deciding whether to opt-in.

Suggested Citation

  • Belke, Ansgar & Dobrzańska, Anna & Gros, Daniel & Smaga, Paweł, 2016. "(When) should a non-euro country join the banking union?," Ruhr Economic Papers 613, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  • Handle: RePEc:zbw:rwirep:613

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    References listed on IDEAS

    1. Valiante, Diego, 2014. "Framing Banking Union in the Euro Area: Some empirical evidence," CEPS Papers 8882, Centre for European Policy Studies.
    2. Ansgar Belke, 2013. "Towards a Genuine Economic and Monetary Union—Comments on a Roadmap," Politics and Governance, Cogitatio Press, vol. 1(1), pages 48-65.
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    4. Dirk Schoenmaker & Arjen Siegmann, 2013. "Efficiency Gains of a European Banking Union," Tinbergen Institute Discussion Papers 13-026/IV/DSF51, Tinbergen Institute.
    5. Malgorzata Iwanicz-Drozdowska & Jakub Kerlin & Paweł Smaga & Marta Tomasik, 2015. "EU guarantee schemes: Status quo and policy implications," Journal of Banking Regulation, Palgrave Macmillan, vol. 16(3), pages 201-219, July.
    6. Fabian Valencia & Luc Laeven, 2012. "Systemic Banking Crises Database; An Update," IMF Working Papers 12/163, International Monetary Fund.
    7. Schoenmaker, Dirk, 2011. "The financial trilemma," Economics Letters, Elsevier, vol. 111(1), pages 57-59, April.
    8. Zsolt Darvas & Guntram B. Wolff, 2013. "Should Non-Euro Area Countries Join the Single Supervisory Mechanism?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 2, pages 141-163, June.
    9. Pia Hüttl & Dirk Schoenmaker, 2016. "Should the ‘outs’ join the European banking union?," Policy Contributions 12165, Bruegel.
    10. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund," CEPS Papers 6918, Centre for European Policy Studies.
    11. Gros, Daniel, 2013. "The SRM and the dream to resolve banks without public money," CEPS Papers 8774, Centre for European Policy Studies.
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    13. Anikó Szombati & Kornél Kisgergely, 2014. "Banking union through Hungarian eyes - The MNB’s assessment of a possible close cooperation," MNB Occasional Papers 2014/115, Magyar Nemzeti Bank (Central Bank of Hungary).
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    15. Eddy Wymeersch, 2014. "The single supervisory mechanism or “SSM”, part one of the Banking Union," Working Paper Research 255, National Bank of Belgium.
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    banking union; resolution; supervision; deposit guarantee scheme; euro; the ECB;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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