Memo

Banking union demands political leadership

Banking union demands political leadership

Summary At first glance, the Danish public seems critical about Denmark being part of a banking union. 53 percent are against, 26 percent are for and 21 percent are unsure. But if prominent leaders in the community speak up on the matter, it is another story. This is what a new analysis, published by Think Tank EUROPA and based on an opinion poll conducted by YouGov, shows. In this context, 44 percent of the Danish population “agree” or “strongly agree” with the director of the Danish National Bank, Lars Rohde, that Danish participation in a banking union would be in Denmark’s best interest. Only 24 percent “partly” or “strongly” disagree.
 
The general consensus among the public is that the banking union is a complex matter. They want more information about the banking union before they give an answer about it. Almost every third critic does not feel equipped enough to form an opinion. Women in particular would like to know more, whereas the men (according to themselves) feel more at home with the complicated issue.
 
This lack of knowledge, along with concerns about unpaid bills from southern European banks, are decisive factors in answering the question about Denmark’s participation in the banking union. Three out of 10 who are against it believe that we ought to fear the bill from foreign banks.
 
The opinion poll shows that Danes would be in favour of a banking union if it is secured and that the banks, rather than the taxpayers, would be liable in case of bank failures. In this case, 47 percent of Danes would agree to a banking union if the banks paid themselves. 26 percent would vote “no”, while 27 percent are unsure. In this context, it is important to emphasise that the banking union is actually based on the Danish model, which was developed in the various bank rescue packages in the wake of the financial crisis in 2008.
 
An indirect satisfaction with the Danish Financial Supervisory Authority (DFSA) can be detected among Danes. As such, 43 percent of the population do not want the supervision of major banks to be transferred from the DFSA to a common European authority. Therefore it is essential to make it clear that a common supervision of banks in the EU would be founded on top of the national model of supervision.

Main conclusion
  • The Danish population is critical when it comes to Denmark joining a European banking union. Clear messages from prominent leaders on the matter, however, lift their support so significantly that it is enough to muster a positive majority.
  • There is a need for more information on the banking union. The proportion of doubters is high – especially among the women surveyed.
  • One of the main reasons behind the public’s opposition to the banking union is the concern that Denmark and Danish taxpayers may have to foot the bill for foreign banks.
  • The public, however, would agree to joining the banking union if it could be ensured that taxpayers would not pay for foreign banks’ failures.
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